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EXHIBIT 10.22
THE HAWK GROUP OF COMPANIES, INC.
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FORM OF
SENIOR SUBORDINATED NOTE AND
WARRANT PURCHASE AGREEMENT
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DATED AS OF JUNE 30, 1995
$30,000,000 12% SENIOR SUBORDINATED NOTES DUE JUNE 30, 2005
OF THE HAWK GROUP OF COMPANIES, INC.
316,970 WARRANTS TO PURCHASE CLASS B COMMON STOCK
OF THE HAWK GROUP OF COMPANIES, INC.
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TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF SUBORDINATED NOTES AND WARRANTS................................................... 1
1.1 Issue of Subordinated Notes................................................................... 1
1.2 Issue of Warrants............................................................................. 2
1.3 The Closing................................................................................... 2
1.4 Purchase for Investment; ERISA................................................................ 3
1.5 Failure To Deliver, Failure of Conditions..................................................... 5
1.6 Expenses...................................................................................... 6
2. WARRANTIES AND REPRESENTATIONS......................................................................... 6
2.1 Nature of Business............................................................................ 7
2.2 Corporate Organization and Authority.......................................................... 7
2.3 Affiliates and Subsidiaries................................................................... 7
2.4 Financial Statements; Debt; Material Adverse Change; Pro Forma
Information................................................................................... 7
2.5 Full Disclosure............................................................................... 8
2.6 Pending Litigation............................................................................ 9
2.7 Title to Properties........................................................................... 9
2.8 Patents, Trademarks, Licenses, etc............................................................ 9
2.9 Sale is Legal and Authorized; Obligations are Enforceable..................................... 9
2.10 No Defaults................................................................................... 11
2.11 Consents...................................................................................... 11
2.12 Taxes......................................................................................... 12
2.13 Use of Proceeds............................................................................... 12
2.14 Private Offering.............................................................................. 13
2.15 Compliance with Law........................................................................... 13
2.16 Restrictions on the Company and Subsidiaries.................................................. 13
2.17 Pension Plans................................................................................. 14
2.18 Certain Laws.................................................................................. 16
2.19 Environmental Compliance...................................................................... 16
2.20 Capitalization................................................................................ 17
2.21 All Documents Provided........................................................................ 18
2.22 Merger of ▇▇▇▇▇▇.............................................................................. 18
2.23 Acquisition of ▇▇▇▇▇▇▇........................................................................ 19
3. CLOSING CONDITIONS..................................................................................... 19
3.1 Opinions of Counsel........................................................................... 19
3.2 Warranties and Representations True; Compliance with this Agreement........................... 20
3.3 Officers' Certificates........................................................................ 20
3.4 Legality...................................................................................... 20
3.5 Private Placement Numbers..................................................................... 20
3.6 Subsidiary Subordinated Guarantees............................................................ 20
3.7 Warrant Agreement; Shareholders' Agreement.................................................... 21
3.8 Reservation of Shares......................................................................... 21
3.9 Bank Loan Agreement........................................................................... 21
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TABLE OF CONTENTS (CONT.)
3.10 Acquisition and Merger........................................................................ 22
3.11 Equity Documents.............................................................................. 22
3.12 Letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co...................................................... 22
3.13 Environmental Reports......................................................................... 22
3.14 Solvency Opinion.............................................................................. 23
3.15 Expenses...................................................................................... 23
3.16 Proceedings Satisfactory...................................................................... 23
4. PURCHASERS' SPECIAL RIGHTS............................................................................. 23
4.1 Direct Payment................................................................................ 23
4.2 Delivery Expenses............................................................................. 24
4.3 Issue Taxes................................................................................... 24
5. PAYMENTS OF PRINCIPAL.................................................................................. 24
5.1 Required Prepayments of Subordinated Notes and Payment at Maturity............................ 24
5.2 Optional Prepayments.......................................................................... 24
5.3 Offer to Prepay upon Change in Control........................................................ 25
5.4 Partial Prepayment Pro Rata................................................................... 27
5.5 Effect of Prepayment.......................................................................... 27
5.6 Notation of Subordinated Notes on Prepayment.................................................. 27
5.7 No Other Optional Prepayments................................................................. 27
5.8 Valuable Rights............................................................................... 27
5.9 Delivery of Subordinated Notes in Payment of Warrant Purchase Price........................... 28
6. REGISTRATION; SUBSTITUTION OF SUBORDINATED NOTES....................................................... 28
6.1 Registration of Subordinated Notes............................................................ 28
6.2 Exchange of Subordinated Notes................................................................ 28
6.3 Replacement of Subordinated Notes............................................................. 29
6.4 Limitation on Transfers....................................................................... 29
7. COMPANY BUSINESS COVENANTS............................................................................. 29
7.1 Payment of Taxes and Claims................................................................... 30
7.2 Maintenance of Properties and Corporate Existence............................................. 30
7.3 Payment of Subordinated Notes and Maintenance of Office....................................... 31
7.4 Debt Restrictions............................................................................. 31
7.5 Liens......................................................................................... 33
7.6 Merger, Consolidation, etc.................................................................... 36
7.7 Transfers of Property......................................................................... 37
7.8 Restricted Payments........................................................................... 39
7.9 Line of Business.............................................................................. 40
7.10 Transactions with Affiliates.................................................................. 40
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TABLE OF CONTENTS (CONT.)
7.11 Pension Plans................................................................................. 40
7.12 Pro-Rata Offers............................................................................... 42
7.13 Private Offering.............................................................................. 42
7.14 Amendments to Acceptable Credit Facilities.................................................... 42
7.15 Provision of Subsidiary Subordinated Guarantees............................................... 42
8. INFORMATION AS TO COMPANY.............................................................................. 43
8.1 Financial and Business Information............................................................ 43
8.2 Officers' Certificates........................................................................ 46
8.3 Accountants' Certificates..................................................................... 47
8.4 Inspection.................................................................................... 47
9. EVENTS OF DEFAULT...................................................................................... 48
9.1 Nature of Events.............................................................................. 48
9.2 Default Remedies.............................................................................. 50
9.3 Annulment of Acceleration of Subordinated Notes............................................... 51
10. SUBORDINATION OF SUBORDINATED NOTES.................................................................... 52
10.1 General....................................................................................... 52
10.2 Default in Respect of Senior Debt............................................................. 52
10.3 Insolvency, etc............................................................................... 53
10.4 Turnover of Payments.......................................................................... 53
10.5 Obligations Not Impaired...................................................................... 54
10.6 Payment of Senior Debt; Subrogation........................................................... 54
10.7 Reliance of Holders of Senior Debt............................................................ 54
10.8 Reinstatement of Subordination................................................................ 55
11. INTERPRETATION OF THIS AGREEMENT....................................................................... 55
11.1 Terms Defined................................................................................. 55
11.2 Generally Accepted Accounting Principles...................................................... 78
11.3 Directly or Indirectly........................................................................ 78
11.4 Section Headings and Table of Contents and Construction....................................... 78
11.5 Governing Law; Jurisdiction................................................................... 79
12. MISCELLANEOUS.......................................................................................... 79
12.1 Communications................................................................................ 79
12.2 Indemnification of Each Holder................................................................ 80
12.3 Reproduction of Documents..................................................................... 81
12.4 Survival...................................................................................... 82
12.5 Successors and Assigns........................................................................ 82
12.6 Amendment and Waiver.......................................................................... 82
12.7 Payments, When Received....................................................................... 84
12.8 Duplicate Originals, Execution in Counterpart................................................. 84
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TABLE OF CONTENTS (CONT.)
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing
Annex 3 -- Information as to Company and Subsidiaries
Exhibit A -- Form of Subordinated Note
Exhibit B1 -- Form of Company Counsel's Closing Opinion
Exhibit B2 -- Form of Special Counsel's Closing Opinion
Exhibit C1 -- Form of Company Officer's Certificate
Exhibit C2 -- Form of Subsidiary Officer's Certificate
Exhibit D1 -- Form of Company Secretary's Certificate
Exhibit D2 -- Form of Subsidiary Secretary's Certificate
Exhibit E -- Form of Subsidiary Subordinated Guarantee Agreement
Exhibit F -- Form of Warrant Agreement
Exhibit G -- Form of Shareholders' Agreement
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THE HAWK GROUP OF COMPANIES, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FORM OF
SENIOR SUBORDINATED NOTE AND
WARRANT PURCHASE AGREEMENT
---------------------------------------------------
$30,000,000 12% SENIOR SUBORDINATED NOTES DUE JUNE 30, 2005
316,970 WARRANTS TO ACQUIRE CLASS B COMMON STOCK
Dated as of June 30, 1995
[NAME AND ADDRESS OF PURCHASER]
Ladies and Gentlemen:
THE HAWK GROUP OF COMPANIES, INC. (together with its successors and
assigns, the "COMPANY"), a Delaware corporation, hereby agrees with you as
follows:
1. PURCHASE AND SALE OF SUBORDINATED NOTES AND WARRANTS
1.1 ISSUE OF SUBORDINATED NOTES.
The Company will authorize the issue of Thirty Million Dollars
($30,000,000) in aggregate principal amount of its 12% Senior Subordinated Notes
Due June 30, 2005 (the "SUBORDINATED NOTES"). Each Subordinated Note shall:
(a) bear interest (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid principal balance thereof from the
date of such Subordinated Note at the rate of twelve percent (12%) per
annum, payable quarterly on the last day of each March, June, September
and December in each year commencing on the later of (i) September 30,
1995 or (ii) the payment date next succeeding the date of such
Subordinated Note, until the principal amount thereof shall be due and
payable;
(b) bear interest, payable on demand, on any overdue principal
(including any overdue prepayment of principal) and the Prepayment
Compensation Amount, if any, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the
lesser of
(i) the highest rate allowed by applicable law or
(ii) the greater of
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(A) fourteen percent (14%) per annum, or
(B) two percent (2%) per annum in excess of
the rate of interest publicly announced by ▇▇▇▇▇▇
Guaranty Trust Company of New York from time to time
in New York City as its "Prime Rate;"
(c) mature on June 30, 2005; and
(d) be in the form of the Subordinated Note set out in
Exhibit A.
1.2 ISSUE OF WARRANTS.
The Company will authorize the issue (in accordance with the terms and
provisions of the Warrant Agreement) of Three Hundred Sixteen Thousand Nine
Hundred Seventy (316,970) Warrants.
1.3 THE CLOSING.
(a) PURCHASE AND SALE OF SUBORDINATED NOTES. The Company
hereby agrees to sell to you and you hereby agree to purchase from the
Company, in accordance with the provisions hereof, the aggregate
principal amount of Subordinated Notes set forth below your name on
Annex 1 at one hundred percent (100%) of the principal amount thereof.
(b) THE CLOSING. The closing (the "CLOSING") of the Company's
sale of Subordinated Notes shall be held on June 30, 1995 (the "CLOSING
DATE") at 10:00 a.m., local time, at the office of White & Case, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇. At the Closing, the
Company shall deliver to you
(i) one or more Subordinated Notes (as set forth below
your name on Annex 1), in the denominations indicated on
Annex 1, in the aggregate principal amount of your purchase,
dated the Closing Date and registered in your name or as
indicated on Annex 1, and
(ii) one or more Warrant Certificates (as set forth
below your name on Annex 1) evidencing the number of
Warrants indicated on Annex 1, dated the Closing Date and
registered in your name or as indicated on Annex 1
against payment by federal funds wire transfer in immediately available
funds of the purchase price therefor, as directed by the Company on
Annex 2.
(c) OTHER PURCHASERS. Contemporaneously with the execution and
delivery hereof, the Company is entering into a separate Senior
Subordinated Note and Warrant Purchase Agreement identical (except for
the name and signature of the purchaser) to this Agreement (this
Agreement and such other separate Senior Subordinated Note and Warrant
Purchase Agreements, each as from time to time amended or modified,
being herein sometimes referred to as the "NOTE PURCHASE AGREEMENTS")
with each other purchaser (individually, an "OTHER PURCHASER," and
collectively, the "OTHER PURCHASERS")
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listed on Annex 1, providing for the sale to each Other Purchaser of
Subordinated Notes in the aggregate principal amount (and the issuance
of the number of Warrants) set forth below its name on such Annex. The
sales of the Subordinated Notes (and the issuance of the Warrants) to
you and to each Other Purchaser are to be separate sales.
1.4 PURCHASE FOR INVESTMENT; ERISA.
(a) PURCHASE FOR INVESTMENT. You warrant and represent to the
Company that
(i) you are an accredited investor (as such term is
defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act)
and that you are purchasing the Subordinated Notes listed on
Annex 1 below your name and the Warrants identified on such
Annex below your name for your own account and for investment
purposes only, with no present intention of selling or
distributing the Subordinated Notes or the Warrants or any
part thereof, but without prejudice to your right at all times
to
(A) sell or otherwise dispose of all or any part of the
Subordinated Notes or the Warrants under a registration
statement filed under the Securities Act, or in a
transaction exempt from the registration requirements of
such Act, and
(B) have control over the disposition of all of your
assets to the fullest extent required by any applicable law;
(ii) you understand that the Subordinated Notes and
Warrants have not been registered under the Securities Act, in
reliance upon the exemption from registration afforded by
Section 4(2), and that the Company's reliance upon the
availability of such exemption has been predicated in part on
the warranties and representations set forth herein;
(iii) you have reviewed the form of Warrant
Certificate and you understand such Warrant Certificate may
bear legends indicating that certain restrictions are imposed
on the Warrants and Warrant Shares as set forth by the certain
Shareholders' Agreement; and
(iv) the Company has made available to you at a
reasonable time prior to your execution of this Agreement the
opportunity to ask questions and receive answers concerning
the Company and the Subsidiaries, their operations, and the
financial statements of the Company and the Subsidiaries and
to obtain any additional information which the Company
possesses or can acquire without unreasonable effort or
expense that is necessary to verify the accuracy of the
information furnished to you by the Company. You are an
experienced investor familiar with business and financial
matters.
It is understood that, in making the representations set out
in Section 2.9(a), Section 2.9(b) and Section 2.11(a), the Company is
relying, to the extent applicable, upon your
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representation as aforesaid. All of the warranties and any
representations made herein shall survive the Closing.
(b) ERISA. You represent, with respect to the funds with which
you are acquiring the Subordinated Notes and the Warrants, if any,
that all of such funds are from or are attributable to one or more of:
(i) GENERAL ACCOUNT -- your general account assets or
assets of one or more segments of such general account, as the
case may be , and that either,
(A) 10% EXEMPTION -- such acquisition would
be exempt under the provisions of the proposed
prohibited transaction class exemption published by
the Department of Labor in the Federal Register on
August 22, 1994 (59 F.R. 43134, August 22, 1994);
provided that you are relying on the Company's
representations set forth in Section 2.17(c)(ii) in
determining
(I) whether there is any Pension
Plan that has an interest in your "insurance
company general account" (as defined in such
proposed exemption) and in respect of which
there exists "general account reserves" (as
determined under Section 807(d) of the IRC)
for the contract or contracts held by or on
behalf of such Pension Plan, and
(II) whether such reserves, when
aggregated with the amount of the "reserves"
for the contracts held by or on behalf of
any other "employee benefit plans"
maintained by the same "employer" in respect
of such Pension Plan or "affiliates" thereof
or by the same "employee organization" in
respect of such Pension Plan, exceed ten
percent (10%) of the total of all
liabilities of such insurance company
general account ("reserves" are determined
under Section 807(d) of the IRC, "employee
benefit plans" is defined in section 3 of
ERISA, "employer" is defined in section 3 of
ERISA, "affiliates" is defined in the
proposed exemption, and "employee
organization" is defined in section 3 of
ERISA), or
(B) GENERAL ACCOUNT EXEMPTION -- no part of
such assets constitutes assets of an "employee
pension benefit plan" (as defined in section 3 of
ERISA) maintained by the Company or any ERISA
Affiliate or of a "plan" (as defined in section 4975
of the IRC) maintained by any ERISA Affiliate (it is
understood that you are relying on the present and
continuing validity and applicability of Department
of Labor Interpretive Bulletin 29 C.F.R.
section 2509.75-2(b));
(ii) SEPARATE ACCOUNT -- a "separate account" (as
defined in section 3 of ERISA):
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(A) 10% POOLED SEPARATE ACCOUNT -- in
respect of which all requirements for an exemption
under DOL Prohibited Transaction Class Exemption 90-1
are met with respect to the use of such funds to
purchase the Subordinated Notes and Warrants, if any;
(B) IDENTIFIED PLAN ASSETS -- that is
comprised of employee benefit plans identified by you
in writing and with respect to which the Company
hereby warrants and represents that, as of the
Closing Date, neither the Company nor any ERISA
Affiliate is a "party in interest" (as defined in
section 3 of ERISA) or a "disqualified person" (as
defined in section 4975 of the IRC) with respect to
any plan so identified; or
(C) GUARANTEED SEPARATE ACCOUNT -- that is
maintained solely in connection with fixed
contractual obligations of an insurance company,
under which any amounts payable, or credited, to any
employee benefit plan having an interest in such
account and to any participant or beneficiary of such
plan (including an annuitant) are not affected in any
manner by the investment performance of the separate
account (as provided by 29 C.F.R.
section 2510.3-101(h)(1)(iii));
(iii) QUALIFIED PROFESSIONAL ASSET MANAGER -- an
"investment fund" managed by a "qualified professional asset
manager" (as such terms are defined in Part V of DOL
Prohibited Transaction Class Exemption 84-14) and all the
requirements for an exemption under such Exemption are met
with respect to the use of funds to purchase the Subordinated
Notes and the Warrants;
(iv) EXCLUDED PLAN -- an employee benefit plan that
is excluded from the provisions of section 406 of ERISA by
virtue of section 4(b) of ERISA; or
(v) EXEMPT FUNDS -- a separate investment account
that is not subject to ERISA and no funds of which come from
assets of an "employee benefit plan" or a "plan" or any other
entity that is deemed to hold assets of an "employee benefit
plan" or a "plan," ("employee benefit plan" is defined in
section 3 of ERISA, and "plan" is defined in section
4975(e)(1) of the IRC).
1.5 FAILURE TO DELIVER, FAILURE OF CONDITIONS.
If at the Closing the Company fails to tender to you the Subordinated
Notes or the Warrants to be purchased by you thereat, or if the conditions
specified in Section 3 to be fulfilled at the Closing have not been fulfilled,
you may thereupon elect to be relieved of all further obligations hereunder.
Nothing in this Section 1.5 shall operate to relieve the Company from any of
their obligations hereunder or to waive any of your rights against the Company.
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1.6 EXPENSES.
(a) GENERALLY. Whether or not the Subordinated Notes and the
Warrants are sold, the Company shall promptly (and in any event within
thirty (30) days of receiving any statement or invoice therefor) pay
all reasonable fees, expenses and costs relating hereto, including but
not limited to:
(i) the cost of reproducing this Agreement, the
Subordinated Notes, the Warrant Agreement, the Warrants and
each other Financing Document;
(ii) the reasonable fees and the disbursements of your
special counsel;
(iii) the out-of-pocket cost of delivering to your home
office or custodian bank, insured to your satisfaction, the
Subordinated Notes and Warrants purchased by you at the
Closing;
(iv) the reasonable fees and the expenses and
out-of-pocket costs incurred in complying with each of the
conditions to closing set forth in Section 3, including
without limitation, the fees and expenses of Environmental
Risk Limited and Valuation Research Corporation; and
(v) the expenses relating to the consideration,
negotiation, preparation or execution of any amendments,
waivers or consents pursuant to the provisions hereof or of
any other Financing Document, whether or not any such
amendments, waivers or consents are executed.
(b) COUNSEL. Without limiting the generality of the foregoing,
it is agreed and understood that the Company will pay, at the Closing,
the statement for reasonable fees and the disbursements of your special
counsel presented at the Closing and the Company will also pay upon
receipt of any statement thereof, each additional statement for
reasonable fees and the disbursements of your special counsel rendered
after the Closing in connection with the issuance of the Subordinated
Notes and the Warrants or the matters referred to in Section 1.6(a)(v).
(c) SURVIVAL. The obligations of the Company under this
Section 1.6 shall survive the payment or prepayment of the Subordinated
Notes and the suspension or termination of any or all of the provisions
hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the
Subordinated Notes listed on Annex 1 below your name, the Company warrants and
represents, as of the Closing Date after giving effect to each of the
Acquisition, the Merger, and the execution and delivery by the Company of the
Bank Documents, as well as the application of the proceeds from the sale of the
Subordinated Notes and Warrants and the incurrence of Senior Debt as set forth
in PART 2.13 OF ANNEX 3, as follows:
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2.1 NATURE OF BUSINESS.
The Financing Memorandum (together with all exhibits and annexes
thereto, the "PLACEMENT MEMORANDUM"), dated February 1995, prepared by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. (a copy of which has previously been delivered to you),
correctly describes in all material respects the general nature of the
businesses and principal Properties which the Company and the Subsidiaries own
or lease on the Closing Date.
2.2 CORPORATE ORGANIZATION AND AUTHORITY.
The Company and each Subsidiary:
(a) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation;
(b) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted;
(c) has all licenses, certificates, permits, franchises and other
governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted, except where
the failure to have such licenses, certificates, permits, franchises
and other governmental authorizations could not, in the aggregate for
all such failures, reasonably be expected to have a Material Adverse
Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state where the failure to be so qualified or
licensed and authorized and in good standing could, in the aggregate
for all such failures, reasonably be expected to have a Material
Adverse Effect.
2.3 AFFILIATES AND SUBSIDIARIES.
PART 2.3 OF ANNEX 3 sets forth:
(i) the name of each of the Affiliates (other than
officers, directors and members of their respective
immediate families) and the nature of the affiliation of
such Affiliates; and
(ii) the name of each Subsidiary, its jurisdiction of
incorporation (or organization) and the percentage of its
Voting Stock owned by the Company and each other Subsidiary.
2.4 FINANCIAL STATEMENTS; DEBT; MATERIAL ADVERSE CHANGE; PRO FORMA
INFORMATION.
(a) FINANCIAL STATEMENTS OF THE COMPANY. The historical financial
statements of the Company, the Subsidiaries, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
described in PART 2.4(a) OF ANNEX 3 have been prepared in accordance
with GAAP (except as otherwise indicated in the notes thereto), and
present fairly, in all material respects, the respective financial
position of the
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Company, the Subsidiaries, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, as the case may be, as
of the respective dates, and the respective results of their operations
and cash flows for the periods, covered thereby.
(b) DEBT. PART 2.4(b) OF ANNEX 3 correctly lists all
outstanding Debt of the Company and the Subsidiaries as of the Closing
Date, and provides the following information with respect to each item
of Debt:
(i) the type thereof;
(ii) the holder thereof;
(iii) the outstanding amount;
(iv) the portion which is classified as current
under GAAP, if any; and
(v) the collateral securing such Debt, if any.
(c) MATERIAL ADVERSE CHANGE. Since December 31, 1994, there
has been no change in the business, Properties or condition (financial
or otherwise) of the Company or any of the Subsidiaries, except changes
that, in the aggregate, have not had, a Material Adverse Effect.
(d) SUMMARY AND PRO FORMA FINANCIAL INFORMATION. The pro forma
and projected information described in PART 2.4(D) OF ANNEX 3 (the
"PROJECTIONS") have been derived from the financial statements
described in PART 2.4(a) OF ANNEX 3 and prepared with accounting
principles currently used by the Company, except as noted therein, and
all material assumptions on which such projections were based are
disclosed therein. The assumptions used in preparation of the
Projections were reasonable when made and continue to be reasonable.
Such Projections have been prepared in good faith, have a reasonable
basis and represent the good faith opinion of the Company as to the
projected results of the operations of the Company after giving effect
to the Acquisition, the Merger, the Bank Documents and the transactions
contemplated by the Financing Documents. No material facts have
occurred since the preparation of the Projections that would cause the
Projections, taken as a whole, not to be reasonably attainable.
Notwithstanding anything to the contrary in this Section 2.4(d), the
Company does not warrant the ability of the Company to achieve the
results presented in the Projections.
2.5 FULL DISCLOSURE.
The information set forth in the financial statements referred to in
Section 2.4(a), this Agreement, the Placement Memorandum and any written
statement furnished by or on behalf of the Company to you in connection with the
sale of the Subordinated Notes and the Warrants, taken as a whole, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading in
light of the circumstances under which such information was provided. There is
no fact that the Company has not disclosed
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to you in writing that has had or, so far as the Company can now reasonably
foresee, will have a Material Adverse Effect.
2.6 PENDING LITIGATION.
There are no proceedings, actions or investigations pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal that could, in the aggregate for all such proceedings, actions
or investigations, reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is in default with respect to any
judgment, order, writ, injunction, or decree of any court, Governmental
Authority or arbitration board or tribunal that could, in the aggregate for all
such defaults, reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no Management Stockholder is party to any pending
proceedings, actions or investigations, nor does the Company have any knowledge
of any threatened proceedings, actions or investigations by any Management
Stockholder, adverse to the Company.
2.7 TITLE TO PROPERTIES.
Each of the Company and the Subsidiaries has good and marketable title
to all of the Property reflected as being owned by the Company and the
Subsidiaries, as the case may be, in the most recent balance sheets of such
Person referred to in Section 2.4(a) and all of the Property purported to have
been acquired by the Company or any Subsidiary, as the case may be, after said
date (except as sold or otherwise disposed of in the ordinary course of
business), free from Liens not otherwise permitted by Section 7.5. All leases
necessary for the conduct of the business of the Company and the Subsidiaries
are valid and subsisting and are in full force and effect, except for such
failures to be valid, subsisting and in full force and effect as could not, in
the aggregate for all such failures, reasonably be expected to have a Material
Adverse Effect.
2.8 PATENTS, TRADEMARKS, LICENSES, ETC.
Except as set forth in PART 2.8 OF ANNEX 3, each of the Company and the
Subsidiaries owns, possesses or has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, licenses, and rights with
respect thereto (collectively, the "EXISTING INTANGIBLES"), necessary for the
present planned future conduct of its business, without any known conflict with
the rights of others. There are no current infringements of, or contests with
respect to the validity of, any Existing Intangible except for such
infringements or contests that could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
2.9 SALE IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(a) SALE IS LEGAL AND AUTHORIZED. Each of the issue, sale and
delivery of the Subordinated Notes and the Warrants by the Company, the
execution and delivery by the Company of each of the Financing
Documents to which it is a party and the compliance by the Company with
all of the provisions of the Financing Documents to which it is a
party:
(i) is within the corporate powers of the Company; and
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(ii) does not conflict with, result in any material breach
in any of the provisions of, constitute a default under, or
result in the creation of any Lien (other than the Liens
permitted by Section 7.5) upon any Property of the Company or any
Subsidiary under the provisions of,
(A) any agreement, charter instrument, bylaw
or other instrument to which the Company or any
Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective Properties may
be bound, or
(B) any order, judgment, decree, or ruling
of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary.
(b) SUBSIDIARY SUBORDINATED GUARANTEES LEGAL AND AUTHORIZED. The
execution and delivery by each Subsidiary of the Subsidiary
Subordinated Guarantee to which it is a party and the compliance by
each such Subsidiary with all of the provisions thereof:
(i) is within the corporate powers of such Subsidiary; and
(ii) does not conflict with, result in any material breach
in any of the provisions of, constitute a default under, or
result in the creation of any Lien (other than Liens permitted by
Section 7.5) upon any Property of such Subsidiary under the
provisions of,
(A) any agreement, charter instrument, bylaw
or other instrument to which such Subsidiary is a
party or by which such Subsidiary or any of its
Properties may be bound, or
(B) any order, judgment, decree, or ruling
of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary.
(c) OBLIGATIONS ARE ENFORCEABLE. The Company and each Subsidiary
has duly authorized by all necessary action on its part each of the
Financing Documents to which it is a party. Each of the Financing
Documents to which the Company is a party and, with respect to each
Subsidiary which is a party to a Subsidiary Subordinated Guarantee,
such Subsidiary Subordinated Guarantee, has been duly executed and
delivered by one or more duly authorized officers of the Company or
such Subsidiary, as the case may be, and constitutes a legal, valid
and binding obligation of the Company or such Subsidiary, as the case
may be, except, in each case:
(i) as such enforceability may be limited by applicable
bankruptcy, reorganization, arrangement, fraudulent conveyance,
insolvency, moratorium, or other similar laws affecting the
enforceability of creditors' rights generally;
(ii) as such enforceability may be subject to the
availability of equitable remedies; and
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(iii) that certain rights to indemnity and contribution may
be limited by applicable law.
2.10 NO DEFAULTS.
(a) SUBORDINATED NOTES AND WARRANTS. No event has occurred and
no condition exists that, upon the issue of the Subordinated Notes and
the Warrants and the execution and delivery of any of the Financing
Documents, would constitute a Default or an Event of Default.
(b) CHARTER INSTRUMENT, OTHER AGREEMENTS. Neither the Company
nor any Subsidiary is in violation in any respect of any term of any
charter instrument or bylaw, and neither the Company nor any Subsidiary
is in violation of any term of any agreement or other instrument to
which it is a party or by which it or any of its Property may be bound
which violations could, in the aggregate for all such violations,
reasonably be expected to have a Material Adverse Effect.
(c) CERTAIN COVENANTS. Except for the Acquisition, the Merger,
the execution of the Bank Documents and the other transactions
contemplated herein, the Company has not entered into any transaction
since the date of the most recent statement of financial condition
referred to in Section 2.4(a) that would have been prohibited by
Section 7.4 through Section 7.10, inclusive, had such Sections applied
since such date.
(d) OTHER DEBT. No event or condition exists with respect to
any Debt of the Company or any Subsidiary with an outstanding principal
amount in excess of One Million Dollars ($1,000,000) that would permit
(or with the lapse of time or the giving of notice would permit) a
Person to cause such Debt to become due and payable prior to its stated
maturity or its regularly scheduled dates of payment.
2.11 CONSENTS.
(a) GOVERNMENTAL CONSENTS. Neither the nature of the Company
nor any Subsidiary or their respective businesses or Properties, nor
any relationship between the Company or any Subsidiary and any other
Person, nor any circumstance in connection with the offer, issue, sale
or delivery of the Subordinated Notes or the Warrants and the execution
and delivery of any Financing Document or the performance thereof, is
such as to require a consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority on the
part of the Company or any of the Subsidiaries as a condition to the
execution and delivery or performance of any Financing Document or the
offer, issue, sale or delivery of the Subordinated Notes and the
Warrants except where such failure to obtain such approval or
authorization could not, in the aggregate for all such failures,
reasonably be expected to have a Material Adverse Effect.
(b) THE ACQUISITION AND MERGER. All consents, approvals and
authorizations of, and filings, registrations and qualifications with,
any Governmental Authority or any other Person on the part of the
Company required in connection with the consummation of the Acquisition
and the Merger have been obtained or made and remain in full force and
effect,
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except for applicable "blue sky" filings and filing under the
Investment Canada Act which, in each case, are not required to be made
prior to the Closing Date.
2.12 TAXES.
(a) RETURNS FILED, TAXES PAID. All Federal, state, local and
other material tax returns required to be filed by the Company, ▇▇▇▇▇▇
and any other Person with whom the Company or ▇▇▇▇▇▇ files a
consolidated return in any jurisdiction have in fact been filed on a
timely basis, except for any tax return for which an extension has been
timely filed, and all taxes, assessments, fees and other governmental
charges upon the Company and any such Person referred to herein, and
upon any of their respective Properties, income or franchises, that are
due and payable have been paid except for those taxes or assessments
that are being contested in good faith, by appropriate proceedings and
for which adequate book reserves have been established and exist with
respect thereto. The Company does not know of any proposed additional
tax assessment against it or any such Person. Except as set forth in
PART 2.12(a) OF ANNEX 3, as of the Closing Date, there is no current
audit being conducted by any Governmental Authority with respect to any
federal, state or local taxes due by the Company, any Subsidiary or
▇▇▇▇▇▇ in any fiscal year.
(b) BOOK PROVISIONS ADEQUATE. The amount of the liability for
taxes reflected in each of the statements of financial condition
referred to in Section 2.4(a) is in each case an adequate provision for
taxes as of the dates of such statements of financial condition
(including, without limitation, any payment due pursuant to any tax
sharing agreement) as are or may become payable by any one or more of
the Company, ▇▇▇▇▇▇ and the other Persons consolidated with the Company
in such financial statements in respect of all tax periods ending on or
prior to such dates.
2.13 USE OF PROCEEDS.
(a) USE OF PROCEEDS. The Company shall apply the proceeds
from the sale of the Subordinated Notes as described in PART 2.13 OF
ANNEX 3.
(b) MARGIN SECURITIES. None of the transactions contemplated
by the Financing Documents (including, without limitation, the use of
the proceeds from the sale of the Subordinated Notes) violates, will
violate or will result in a violation of section 7 of the Exchange Act,
or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II. The Company does not
own, and does not intend to own, carry or purchase, or refinance
borrowings that were used to own, carry or purchase, any Margin
Security. The obligations of the Company under this Agreement and the
Subordinated Notes are not and will not be secured by any Margin
Security, and no Subordinated Notes are being sold on the basis of any
such collateral.
(c) OTHER LEGAL REQUIREMENTS. Neither the Company nor any
Subsidiary is an "enemy" or an "ally of the enemy" within the meaning
of section 2 of the Trading with the Enemy Act (50 U.S.C. App.
sections 1 et seq.), as amended. Neither the Company nor any
Subsidiary is in violation of, and the use of the proceeds of the
Subordinated Notes by the
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Company as contemplated by this Agreement will not violate, the Trading
with the Enemy Act, as amended, or any executive orders, proclamations
or regulations issued pursuant thereto, including, without limitation,
regulations administered by the Office of Foreign Asset Control of the
Department of the Treasury (31 C.F.R., Subtitle B, Chapter V).
2.14 PRIVATE OFFERING.
Neither the Company nor ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. (the only Person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Subordinated Notes and the Warrants
or any similar Security) has offered any of the Subordinated Notes, the Warrants
or any similar Security of the Company for sale to, or solicited offers to buy
any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than you and twenty (20) other
institutional investors, each of whom was offered all or a portion of the
Subordinated Notes and the Warrants at private sale for investment.
Neither the Company nor any Person acting for the Company as employee,
agent, broker, dealer or otherwise in connection with the transactions
contemplated by this Agreement (including, without limitation, the issuance of
the Warrants) has engaged in any conduct or entered into any agreements or
understandings so as to bring the transactions contemplated by any of the
Financing Documents within the provisions of section 5 of the Securities Act or
the registration provisions of any applicable state securities laws.
2.15 COMPLIANCE WITH LAW.
Except as set forth in PART 2.15 OF ANNEX 3, neither the Company nor
any Subsidiary is in violation of any law, ordinance, governmental rule or
regulation to which it is subject, which violations, in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
2.16 RESTRICTIONS ON THE COMPANY AND SUBSIDIARIES.
Neither the Company nor any Subsidiary:
(a) is a party, nor, to the knowledge of the Company, is any
Management Stockholder a party, to any contract or agreement, or
subject to any charter or other corporate restriction that could
reasonably be expected to have a Material Adverse Effect;
(b) is a party to any contract or agreement that restricts its
right or ability to incur Debt or in the case of the Company, to issue
capital stock, or warrants, options or similar rights to purchase
capital stock, of the Company, other than the Financing Documents and
the agreements listed on PART 2.16(B) OF ANNEX 3, none of which
restricts the issuance of the Subordinated Notes or the Warrants or the
execution and delivery of, or compliance with, the Financing Documents
by the Company and the Subsidiaries; and
(c) has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its Property,
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 7.5.
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2.17 PENSION PLANS.
(a) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS.
Except as disclosed in PART 2.17(A) OF ANNEX 3, the present value of
all benefits, determined as of the most recent valuation date for such
benefits as provided in Section 7.11, vested under each Pension Plan
does not exceed the value of the assets of such Pension Plan allocable
to such vested benefits, determined as of such date as provided in
Section 7.11.
(b) ERISA REQUIREMENTS. Each of the Company and its ERISA
Affiliates,
(i) has fulfilled all obligations under the minimum
funding standards of ERISA and the IRC with respect to each
Pension Plan that is not a Multiemployer Plan,
(ii) has satisfied all respective contribution
obligations in respect of each Multiemployer Plan,
(iii) is in compliance in all material respects with
all other applicable provisions of ERISA and the IRC with
respect to each Pension Plan and each Multiemployer Plan,
and
(iv) has not incurred any liability under Title IV of
ERISA to the PBGC (other than in respect of required
insurance premiums, all of which that are due having been
paid), with respect to any Pension Plan, any Multiemployer
Plan or any trust established thereunder.
No Pension Plan, or trust created thereunder, has incurred any
accumulated funding deficiency (as such term is defined in section 302
of ERISA), whether or not waived, as of the last day of the most
recently ended plan year of such Pension Plan.
(c) PROHIBITED TRANSACTIONS.
(i) The issuance and sale by the Company of the
Subordinated Notes, and the Warrants, to you will not
constitute a "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC)
that could subject any Person to the penalty or tax on
prohibited transactions imposed by section 502 of ERISA or
section 4975 of the IRC, and neither the Company or any
ERISA Affiliate, nor any "employee benefit plan" (as such
term is hereinafter defined) of the Company or any ERISA
Affiliate or any trust created thereunder or any trustee or
administrator thereof, has engaged in any "prohibited
transaction" that could subject any such Person, or any
other party dealing with such employee benefit plan or
trust, to such penalty or tax. The representation by the
Company in the preceding sentence is made in reliance upon
and subject to the accuracy of the representations in
Section 1.4(b) and furthermore, in connection with funds
with which you are acquiring the Subordinated Notes and the
Warrants and which are from or attributable to your general
account assets or assets of one or more segments of such
general account, this representation is made in reliance on
and
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subject to the fact that either: (A) such acquisition would be
exempt under the provisions of the proposed prohibited
transaction class exemption published by the Department of
Labor in the Federal Register on August 22, 1994 (59 F.R.
43134, August 22, 1994); or (B) no part of such assets
constitutes assets of an "employee pension benefit plan" (as
defined in section 3 of ERISA) maintained by the Company or
any ERISA Affiliate or of a "plan" (as defined in section 4975
of the IRC) maintained by any ERISA Affiliate (it is
understood that the Company is relying on the present and
continuing validity and applicability of Department of Labor
Interpretive Bulletin 29 C.F.R. section 2509.75-2(b)).
(ii) PART 2.17(c) OF ANNEX 3 completely lists all
ERISA Affiliates and all employee benefit plans with respect
to which the Company or any "affiliate" (as such term is
hereinafter defined) of the Company is a "party-in-interest"
(as such term is hereinafter defined) or in respect of which
the Subordinated Notes or the Warrants could constitute an
"employer security" (as such term is hereinafter defined).
As used in this Section 2.17(c), the terms "employee benefit plan" and
"party-in-interest" have the meanings specified in section 3 of ERISA
and "affiliate" and "employer security" have the meanings specified in
section 407(d) of ERISA.
(d) REPORTABLE EVENTS. Except as disclosed in PART 2.17(d) OF
ANNEX 3, no Pension Plan or trust created thereunder has been
terminated, and there have been no Reportable Events, with respect to
any Pension Plan or trust created thereunder or with respect to any
Multiemployer Plan, which reportable event or events will or could
result in the termination of such Pension Plan or Multiemployer Plan
and give rise to a liability of the Company or any ERISA Affiliate in
respect thereof.
(e) MULTIEMPLOYER PLANS. Except as set forth on PART 2.17(d)
OF ANNEX 3, neither the Company nor any ERISA Affiliate, is an employer
required to contribute to any Multiemployer Plan. Neither the Company
nor any ERISA Affiliate, has incurred, nor is expected to incur, any
withdrawal liability (that has not previously been fully satisfied)
under ERISA with respect to any Multiemployer Plan. None of the
Multiemployer Plans referred to on PART 2.17 OF ANNEX 3 have been
terminated under section 4041A of ERISA, have been placed in
reorganization status under Title IV of ERISA, or have been determined
to be "insolvent" (as such term is defined in section 4245 of ERISA).
(f) MULTIPLE EMPLOYER PENSION PLANS. Except as set forth on
PART 2.17(f) OF ANNEX 3 to this Agreement, neither the Company nor any
ERISA Affiliate, is a "contributing sponsor" (as such term is defined
in section 4001 of ERISA) in any Multiple Employer Pension Plan and
neither the Company nor any ERISA Affiliate has incurred (without fully
satisfying the same), or reasonably expects to incur, withdrawal
liability in respect of any such Multiple Employer Pension Plan listed
on PART 2.17(f) OF ANNEX 3 to this Agreement, which withdrawal
liability could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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(g) FOREIGN PENSION PLAN. All Foreign Pension Plans have been
established, operated, administered and maintained in compliance with
all laws, regulations and orders applicable thereto except for such
failures, in the aggregate for all such failures, to comply that could
not reasonably be expected to have a Material Adverse Effect. All
premiums, contributions and any other amounts required by applicable
Foreign Pension Plan documents or applicable laws have been paid or
accrued as required, except for such unpaid premiums, contributions and
amounts that, in the aggregate for all such obligations, could not
reasonably be expected to have a Material Adverse Effect.
2.18 CERTAIN LAWS.
(a) INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is, nor are they directly or indirectly controlled by, or
acting on behalf of any Person which is, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(b) HOLDING COMPANY STATUS. Neither the Company nor any
Subsidiary is a "holding company" or an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company," or a
"public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
2.19 ENVIRONMENTAL COMPLIANCE.
(a) COMPLIANCE. Except as disclosed in the environmental
audits, and the reports listed in PART 2.19(a) OF ANNEX 3, true and
correct copies of which have been delivered to you or Environmental
Risk Limited or otherwise set forth in PART 2.19(a) OF ANNEX 3, each of
the Company and the Subsidiaries is in substantial compliance with all
applicable Environmental Protection Laws in effect in each jurisdiction
where it is presently doing business, and in which the failure to so
comply could, in the aggregate for all such failures, reasonably be
expected to have a Material Adverse Effect;
(b) LIABILITY. Neither the Company nor any Subsidiary is
subject to any liability under any Environmental Protection Law that
could, in the aggregate for all such liabilities, reasonably be
expected to have a Material Adverse Effect; and
(c) NOTICES. EXCEPT AS DESCRIBED ON PART 2.19(c) OF ANNEX 3,
neither the Company nor any Subsidiary has received any
(i) notice from any Governmental Authority by which
any of its present or previously-owned or leased real
Properties has been designated or listed by any Governmental
Authority charged with administering or enforcing any
Environmental Protection Law as a Hazardous Substance disposal
or removal site, "Super Fund" clean-up site, or candidate for
removal or closure pursuant to any Environmental Protection
Law,
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(ii) notice of any Lien arising under or in
connection with any Environmental Protection Law that has
attached to any revenues of, or to, any of its owned or leased
real Properties, or
(iii) summons, citation, notice, directive, letter,
or other written communication from any Governmental Authority
concerning any intentional or unintentional action or omission
by the Company or such Subsidiary in connection with its
ownership or leasing of any real property resulting in the
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, dumping, or otherwise disposing of any Hazardous
Substance into the environment resulting in any violation of
any Environmental Protection Law,
which relates to an event or condition which in the aggregate for all
such events or conditions could reasonably be expected to result in a
Material Adverse Effect.
(d) ENVIRONMENTAL WARRANTIES AND REPRESENTATIONS. All
warranties and representations made by the Company relating to
environmental matters, including, without limitation, compliance with
all Environmental Protection Laws, notices, actions or orders relating
to environmental matters and Hazardous Substances are made solely and
exclusively in this Section 2.19.
2.20 CAPITALIZATION.
PART 2.20 OF ANNEX 3 correctly sets forth, before and after giving
effect to the issuance of the Warrants pursuant to this Agreement and the
Warrant Agreement:
(a) the authorized and outstanding shares of the capital stock
and other Securities of the Company;
(b) the name of each holder of the outstanding shares of the
Company's capital stock and the number of shares held by each such
holder;
(c) all options, warrants and other rights to purchase from
the Company any capital stock of the Company and the holders thereof;
and
(d) all obligations (contingent or otherwise) of the Company
to repurchase or otherwise acquire or retire any shares of capital
stock (or options to purchase the same) of the Company.
All such outstanding shares of capital stock have been duly authorized and
validly issued and are fully paid, non-assessable and not subject to any
restriction or preemptive rights. The Company has authorized and unissued, and
has reserved for issuance, a sufficient number of shares of:
(i) Class B Common Stock to permit the exercise, after giving
effect to the transactions contemplated hereby, of all of the
Warrants; and
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(ii) Class A Common Stock to permit the conversion, after
giving effect to the transactions contemplated hereby, of all of the
Class B Common Stock issuable upon the exercise of the Warrants.
Each such share of Common Stock when issued, will be fully paid and
nonassessable, free and clear of any Lien, and not subject to any preemptive
rights.
2.21 ALL DOCUMENTS PROVIDED.
The Company has provided to each of the Purchasers true, correct and
complete copies of each of the following documents:
(a) the Bank Loan Agreement and all documents and instruments
(except that certain letter agreement, dated April 7, 1995, between the
Company and Bankers Trust Co. with respect to fees and expenses payable
by the Company in connection with the Bank Loan Agreement (the "FEE
LETTER") executed in connection therewith (collectively, the "BANK
DOCUMENTS"), and there is no agreement or understanding between the
Company and the Banks except as set forth in the Bank Documents;
(b) the Acquisition Agreement and all documents pursuant to
which the Acquisition was consummated, together, in each case, with all
amendments and exhibits thereto, and all other documents and
instruments executed, delivered or filed, or to be filed, in connection
with the consummation of the Acquisition (collectively, the
"ACQUISITION DOCUMENTS");
(c) the Merger Agreement, the Certificate of Merger and all
other documents and instruments executed, delivered or filed, or to be
filed, in connection with the consummation of the Merger (collectively,
the "MERGER DOCUMENTS"); and
(d) all agreements or other documents which evidence or
otherwise set forth rights with respect to the capital stock or other
equity securities of the Company (collectively, the "EQUITY
DOCUMENTS").
2.22 MERGER OF ▇▇▇▇▇▇.
(a) The Merger has been consummated in accordance with the
Merger Agreement.
(b) The Certificate of Merger has been duly filed with the
Secretary of State of the State of Delaware and the Merger has been
effected in accordance therewith and with applicable Delaware and Ohio
law. Without limitation of the foregoing, ▇▇▇▇▇▇ has been merged with
and into ▇▇▇▇▇▇ Holdings, the separate corporate existence of ▇▇▇▇▇▇
having ceased at the effective time of the Merger and ▇▇▇▇▇▇ Holdings
being the surviving corporation of the Merger (▇▇▇▇▇▇ Holdings
concurrently with the Merger changing its corporate name to "▇▇▇▇▇▇,
Inc.").
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(c) As a result of the Merger, all and singular, the rights,
privileges, powers and franchises of ▇▇▇▇▇▇, and all Property, real,
personal and mixed, and all debts due to ▇▇▇▇▇▇ on whatever account,
for stock subscriptions as well as all other things in action or
belonging to ▇▇▇▇▇▇, are vested in ▇▇▇▇▇▇ Holdings; and all Property,
rights, privileges, powers and franchises, and all and every other
interest is as effectually the Property of ▇▇▇▇▇▇ Holdings as they were
of ▇▇▇▇▇▇, and the title to any real estate vested by deed or otherwise
in ▇▇▇▇▇▇ has not reverted and is not in any way impaired by reason of
the Merger.
2.23 ACQUISITION OF ▇▇▇▇▇▇▇.
(a) REPRESENTATIONS IN ACQUISITION DOCUMENTS. As of the
Closing Date, prior to giving effect to the Acquisition:
(i) each of the representations and warranties made by
the Company in the Acquisition Documents was true and
correct in all material respects; and
(ii) the Company has no knowledge that any
representation or warranty of ▇▇▇▇▇▇▇ or any other party in
the Acquisition Documents is untrue or misleading in any
material respect.
(b) COMPLIANCE WITH ACQUISITION DOCUMENTS. The Acquisition has
been completed as contemplated by the Acquisition Documents, and there
has been no waiver of any condition to the closing thereof which could
reasonably be expected to have a Material Adverse Effect. ▇.▇. ▇▇▇▇▇▇▇
Acquisition, Inc., a Delaware corporation, has acquired title to the
capital stock of ▇▇▇▇▇▇▇ pursuant to the terms of the Acquisition
Documents free of any Liens not permitted by Section 7.5.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Subordinated Notes and the
Warrants to be delivered to you at the Closing is subject to the following
conditions precedent:
3.1 OPINIONS OF COUNSEL.
You shall have received from
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company and the
Subsidiaries, and
(b) ▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, your special
counsel,
closing opinions, each dated as of the Closing Date, and substantially
in the respective forms set forth in Exhibit B1 and Exhibit B2, and as
to such other matters as you may reasonably request. This Section 3.1
shall constitute direction by the Company to counsel named in the
foregoing clause (a) to deliver such closing opinion to you. In
addition, you shall have received copies of the opinions delivered in
connection with the consummation
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of the Acquisition, accompanied by letters of counsel rendering such
opinions (or, by their terms) stating that you are entitled to rely on
such opinions as if they were addressed to you.
3.2 WARRANTIES AND REPRESENTATIONS TRUE; COMPLIANCE WITH THIS
AGREEMENT.
(A) WARRANTIES AND REPRESENTATIONS TRUE. The warranties and
representations contained in Section 2 shall be true in all material
respects on the Closing Date with the same effect as though made on
and as of that date.
(B) COMPLIANCE WITH THE FINANCING DOCUMENTS. The Company shall
have performed and complied in all material respects with all
agreements and conditions contained herein and in the Warrant Agreement
that, in each case, are required to be performed or complied with by
the Company on or prior to the Closing Date, and such performance and
compliance shall remain in effect on the Closing Date.
3.3 OFFICERS' CERTIFICATES.
You shall have received
(a) a certificate dated the Closing Date and signed on behalf
of the Company by a Senior Officer, substantially in the form of
Exhibit C1, certifying that the conditions specified in Section 3.2
have been fulfilled and that no Default or Event of Default will exist
on the Closing Date after giving effect to the consummation of the
transactions contemplated by this Agreement, and
(b) a certificate dated the Closing Date and signed on behalf
of the Company by the Secretary or an Assistant Secretary of the
Company, substantially in the form of Exhibit D1, with respect to the
matters therein set forth.
3.4 LEGALITY.
If you are an insurance company, the Subordinated Notes and the
Warrants shall on the Closing Date qualify as a legal investment for you under
applicable insurance law (without regard to any "basket" or "leeway" provisions)
and you shall have received such evidence as you may reasonably request to
establish compliance with this condition.
3.5 PRIVATE PLACEMENT NUMBERS.
The Company shall have obtained or caused to be obtained private
placement numbers for the Subordinated Notes and the Warrants from the CUSIP
Service Bureau of Standard & Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. and you
shall have been informed of such private placement numbers.
3.6 SUBSIDIARY SUBORDINATED GUARANTEES.
You shall have received:
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(a) a subordinated guarantee agreement (each, as amended from
time to time, a "SUBSIDIARY SUBORDINATED GUARANTEE") substantially in
the form of Exhibit E, executed and delivered by each Wholly-Owned
Domestic Subsidiary;
(b) a certificate from each Wholly-Owned Domestic Subsidiary
dated the Closing Date and signed by a senior officer of such
Wholly-Owned Domestic Subsidiary, substantially in the form of Exhibit
C2.
(c) a certificate from each Wholly-Owned Domestic Subsidiary
dated the Closing Date and signed by the Secretary or an Assistant
Secretary of such Wholly-Owned Domestic Subsidiary, substantially in
the form of Exhibit D2.
3.7 WARRANT AGREEMENT; SHAREHOLDERS' AGREEMENT.
(a) WARRANT AGREEMENT. The Company shall have executed and
delivered to you and each Other Purchaser the warrant agreement (as
amended from time to time, the "WARRANT AGREEMENT"), substantially in
the form of Exhibit F to this Agreement, in respect of the issuance, in
accordance therewith, of the warrants (the "WARRANTS") to purchase
shares of the Class B Common Stock, such Warrants to be represented by
warrant certificates (the "WARRANT CERTIFICATES") in the form of
Attachment A to the Warrant Agreement. The Company shall have issued to
you and the other Purchasers Warrants in the respective amounts set
forth below your name and each Other Purchaser's name on Annex 1.
(b) SHAREHOLDERS' AGREEMENT. The Company, the Purchasers and
the Management Stockholders shall have entered into a shareholders'
agreement (as amended from time to time, the "SHAREHOLDERS' AGREEMENT")
substantially in the form of Exhibit G; and all certificates evidencing
outstanding shares of the Common Stock shall have been affixed with the
required legends pursuant to Section 8.3 of the Shareholders' Agreement
giving notice of the restrictions imposed by the Shareholders'
Agreement.
3.8 RESERVATION OF SHARES.
The shares of Class B Common Stock issuable upon the exercise of each
Warrant shall have been duly authorized and reserved for issuance upon exercise
of the Warrants. The shares of Class A Common Stock issuable upon conversion of
the Class B Common Stock shall have been duly authorized and reserved for
issuance upon conversion of the Class B Common stock issuable upon exercise of
the Warrants.
3.9 BANK LOAN AGREEMENT.
The Company and the Banks shall have entered into the Bank Loan
Agreement, which agreement, and all documents and instruments executed and
delivered in connection therewith, shall be in form and substance satisfactory
to you. The Company shall have delivered to you a copy of a fully executed Bank
Loan Agreement and a photocopy of each other Bank Document, certified as true
and correct by an officer of the Company. All of conditions precedent to the
obligations of the Banks set forth in Section 5 of the Bank Loan Agreement shall
have been
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satisfied. On the Closing Date, the Banks shall have made, or made available, to
the Company (i) a term loan in principal amount not to exceed Sixty Million
Dollars ($60,000,000), and (ii) a revolving credit loan in an aggregate
principal amount up to the greater of (A) Twenty Million Dollars ($20,000,000)
and (B) the Maximum Revolver Amount from time to time, on the terms and
conditions contained in the Bank Loan Agreement (as in effect on the Closing
Date).
3.10 ACQUISITION AND MERGER.
(a) ACQUISITION. The Acquisition shall have been completed as
contemplated by the Acquisition Documents, and there shall have been no
waiver of any condition to the closing thereof which could reasonably
be expected to have a Material Adverse Effect.
(b) CONSUMMATION OF MERGER. All action necessary to constitute
the Merger a fully consummated, completed and effective transaction,
including, without limitation, the filing of the Certificate of
Ownership and Merger with the Secretary of State of the State of
Delaware, shall have been duly taken and you shall have received such
evidence thereof as you shall request.
(c) WARRANT REDEMPTION. The Company shall, for an aggregate
amount not to exceed $7,000,000 (including any prepayment fee or other
make-whole premium incurred in connection with the Household Warrant
Redemption or the related refinancing of Debt owing to Household),
against surrender of the certificates representing the Household
Warrants, have purchased all Household Warrants outstanding immediately
prior to the Closing Date and cancelled all certificates representing
the Household Warrants received in connection with such purchase (the
"HOUSEHOLD WARRANT REDEMPTION"). In connection with the Household
Warrant Redemption all rights of Household as a holder of such
Household Warrants shall have ceased except the rights to receive the
payments specified in the preceding sentence and certain indemnity,
expense or similar provisions which by their express terms are intended
to survive the Household Warrant Redemption. The Household Warrants
shall not be deemed outstanding for any purpose. You shall have
received evidence in form, scope and substance reasonably satisfactory
to you that the matters set forth in this Section 3.10(c) have been
satisfied on the Closing Date. There shall have been delivered to you
copies, certified as true and correct by a Senior Officer, of all
Household Warrant Redemption Documents, including the certificates
evidencing the Household Warrants so redeemed, all of which shall be in
form and substance reasonably satisfactory to you.
3.11 EQUITY DOCUMENTS.
The Company shall have delivered to you an executed copy of each Equity
Document, certified as true and correct as of the time of the Closing by an
officer of the Company.
3.12 LETTER FROM ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. shall have delivered to you and your
special counsel a letter describing the manner of the offering of the
Subordinated Notes and the Warrants, in form and substance satisfactory to you
and your special counsel.
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3.13 ENVIRONMENTAL REPORTS.
You or Environmental Risk Limited shall have received an environmental
report or reports in respect of each of the real Properties listed in PART
2.19(a) OF ANNEX 3 and each such environmental report shall be acceptable to you
and Environmental Risk Limited.
3.14 SOLVENCY OPINION.
You shall have received a solvency opinion from Valuation Research
Corporation in respect of the Company on a stand alone basis and the Company and
the Subsidiaries on a consolidated basis and such solvency opinion shall be
acceptable to you.
3.15 EXPENSES.
All fees and disbursements required to be paid pursuant to Section
1.7(a) and Section 1.7(b) shall have been paid in full, including, without
limitation, the fees and expenses of Environmental Risk Limited and Valuation
Research Corporation.
3.16 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issuance and sale of the
Subordinated Notes and the Warrants and all documents and papers relating
thereto shall be satisfactory to you and your special counsel. You and your
special counsel shall have received copies of such documents and papers as you
or they may reasonably request in connection therewith or in connection with
your special counsel's closing opinion, all in form and substance satisfactory
to you and your special counsel.
4. PURCHASERS' SPECIAL RIGHTS
4.1 DIRECT PAYMENT.
Notwithstanding anything to the contrary herein or in the Subordinated
Notes, the Company shall pay all amounts payable with respect to each
Subordinated Note held by an Institutional Investor (without any presentment of
such Subordinated Notes and without any notation of such payment being made
thereon) by crediting, by federal funds bank wire transfer, the account of such
Institutional Investor in any bank in the United States of America as may be
designated in writing by such Institutional Investor, or in such other manner as
may be reasonably directed or to such other address in the United States of
America as may be reasonably designated in writing by such Institutional
Investor. Your address on Annex 1 shall be deemed to constitute notice,
direction or designation (as appropriate) to the Company with respect to direct
payments as aforesaid. In all other cases, all amounts payable with respect to
each Subordinated Note shall be made by check mailed and addressed to the
registered holder of each Subordinated Note at the address shown in the register
maintained by the Company pursuant to Section 6.1.
Each holder of Subordinated Notes agrees that in the event it shall
sell or transfer any Subordinated Note
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(a) it shall, prior to the delivery of such Subordinated Note
(unless it shall have already done so), make a notation thereon of all
principal, if any, prepaid on such Subordinated Note and shall also
note thereon the date to which interest shall have been paid on such
Subordinated Note, and
(b) it shall promptly notify the Company of the name and
address of the transferee of any such Subordinated Note so transferred
and the effective date of such transfer.
4.2 DELIVERY EXPENSES.
If any holder of Subordinated Notes surrenders any Subordinated Note to
the Company pursuant hereto, the Company shall pay the cost of delivering to or
from such holder's home office or custodian bank from or to the Company, insured
to the reasonable satisfaction of such holder, the surrendered Subordinated Note
and any Subordinated Note issued in substitution or replacement for the
surrendered Subordinated Note.
4.3 ISSUE TAXES.
The Company shall pay all stamp, duty, excise or other transfer taxes
in connection with the issuance and sale of the Subordinated Notes and in
connection with any modification of this Agreement and the Subordinated Notes
and shall save each holder of Subordinated Notes harmless without limitation as
to time against any and all liabilities with respect to all such taxes. The
obligations of the Company under this Section 4.3 shall survive the payment or
prepayment of the Subordinated Notes and the termination hereof.
5. PAYMENTS OF PRINCIPAL.
5.1 REQUIRED PREPAYMENTS OF SUBORDINATED NOTES AND PAYMENT AT
MATURITY.
The Company shall prepay, and there shall become due and payable, Ten
Million Dollars ($10,000,000) principal amount of the Subordinated Notes on each
of June 30, 2003 and June 30, 2004. Each such required prepayment shall be at
one hundred percent (100%) of the principal amount prepaid, together with
interest accrued thereon to the date of prepayment. The principal of the
Subordinated Notes remaining outstanding, together with interest accrued
thereon, shall become due and payable on June 30, 2005.
5.2 OPTIONAL PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. The Company may prepay the
Subordinated Notes in whole or in part, at any time in multiples of One
Hundred Thousand Dollars ($100,000) (or, if the aggregate outstanding
principal amount of the Subordinated Notes is less than One Hundred
Thousand Dollars ($100,000) at such time, then such principal amount),
together with
(i) interest on such principal amount then being
prepaid accrued to the prepayment date, and
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(ii) an amount equal to the Prepayment Compensation
Amount at such time with respect to the principal amount of
the Subordinated Notes being so prepaid.
(b) NOTICE OF OPTIONAL PREPAYMENT. The Company will give
notice of any optional prepayment of the Subordinated Notes to each
holder of Subordinated Notes not less than thirty (30) days or more
than sixty (60) days before the date fixed for prepayment, specifying:
(i) such date;
(ii) the Section hereof under which the prepayment is
to be made;
(iii) the principal amount of each Subordinated Note to
be prepaid on such date;
(iv) the interest to be paid on each such Subordinated
Note, accrued to the date fixed for payment; and
(v) a reasonably detailed calculation of the Prepayment
Compensation Amount (calculated as if the date of such
notice were the date of the prepayment), if any, due in
connection with such prepayment.
Such notice of prepayment shall also certify all facts that are
conditions precedent to any such prepayment and shall describe in
detail each Trigger Event which shall have occurred on or prior to the
specified prepayment date. Notice of prepayment having been so given,
the aggregate principal amount of the Subordinated Notes specified in
such notice, together with the Prepayment Compensation Amount, if any,
and accrued interest thereon shall become due and payable on the
specified prepayment date. Two (2) Business Days prior to such
prepayment, the Company shall deliver to each holder of Subordinated
Notes being prepaid a certificate of a Senior Financial Officer
specifying the calculation of such Prepayment Compensation Amount as of
such date. Each such certificate shall be accompanied by a copy of any
applicable documentation utilized by the Company in respect of such
calculation.
5.3 OFFER TO PREPAY UPON CHANGE IN CONTROL.
(a) NOTICE AND OFFER. In the event of a Change in Control
the Company will, within thirty (30) days prior to such Change in
Control, give written notice of such Change in Control to each holder
of Subordinated Notes by registered mail and, simultaneously with the
sending of such written notice, send a copy of such notice to each such
holder via an overnight courier of national reputation. Such written
notice shall contain, and such written notice shall constitute, an
irrevocable offer to prepay, subject to Section 5.3(d), all, but not
less than all, the Subordinated Notes held by such holder on a date
specified in such notice (the "CONTROL PREPAYMENT DATE") that is not
less than thirty (30) days and not more than sixty (60) days after the
date of such notice. If the Control Prepayment Date shall not be
specified in such notice, the Control Prepayment Date shall be the
thirtieth (30th) day after
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the date of such holder's receipt of such notice. In no event will the
Company take any action to consummate or finalize a Change in Control
unless contemporaneously with such action the Company prepays all
Subordinated Notes for which prepayment has been accepted pursuant to
Section 5.3(b)(i) (unless such prepayment is not required pursuant to
Section 5.3(d)).
(b) ACCEPTANCE AND PAYMENT; REJECTION.
(i) ACCEPTANCE AND PAYMENT. To accept such offered
prepayment, a holder of Subordinated Notes shall cause a
written notice of such acceptance to be delivered to the
Company prior to the Control Prepayment Date. If so accepted,
subject to Section 5.3(d), such offered prepayment shall be
due and payable on the Control Prepayment Date. Such offered
prepayment shall be made at one hundred percent (100%) of the
principal amount of the Subordinated Notes held by holders
having accepted such offer, together with interest on the
Subordinated Notes then being prepaid accrued to the Control
Prepayment Date.
(ii) REJECTION. A failure to respond to all written
offers of prepayment referred to in this Section 5.3 shall be
deemed to constitute a rejection of such offered prepayment
and shall be deemed to be a waiver of any and all rights to
receive such offered prepayment.
(c) OFFICER'S CERTIFICATE. Each offer to prepay the
Subordinated Notes pursuant to this Section 5.3 shall be accompanied
by a certificate, executed by a Senior Officer and dated the date of
such offer, specifying:
(i) the Control Prepayment Date;
(ii) the Section hereof under which such offer is made;
(iii) the principal amount of each Subordinated Note
offered to be prepaid; and
(iv) the interest that would be due on each
Subordinated Note offered to be prepaid, accrued to the date
fixed for payment;
(v) that the conditions of this Section 5.3 have been
fulfilled; and
(vi) in reasonable detail, the nature and date or
proposed date of the Change in Control.
(d) LIMITATION ON PREPAYMENT. Notwithstanding anything
contained in this Section 5.3 to the contrary, the Company shall not be
obligated to prepay the Subordinated Notes in connection with a Change
in Control on the Control Prepayment Date, if, at such time:
(i) there is any Senior Debt then outstanding, and
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(ii) the Company shall have failed to obtain, not
less than thirty (30) days prior to the Control Prepayment
Date, from the holders of all Senior Debt then outstanding, a
written consent (the "CONTROL PREPAYMENT CONSENT") of such
holders to the prepayment in full of all Subordinated Notes
required to be prepaid in connection with such Change in
Control pursuant to this Section 5.3.
5.4 PARTIAL PREPAYMENT PRO RATA.
If at the time any required or optional prepayment under Section 5.1 or
Section 5.2 is due there is more than one Subordinated Note outstanding, the
aggregate principal amount of each partial prepayment of the Subordinated Notes
shall be allocated among the holders of the Subordinated Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts of the Subordinated Notes then outstanding, with adjustments,
to the extent practicable, to equalize for any prior prepayments not in such
proportion.
5.5 EFFECT OF PREPAYMENT. Each prepayment of the Subordinated Notes
pursuant to Section 5.2 or Section 5.3 shall be applied to reduce ratably each
of the required prepayments of the Subordinated Notes remaining after the date
of such prepayment and the payment due at maturity pursuant to the provisions of
Section 5.1.
5.6 NOTATION OF SUBORDINATED NOTES ON PREPAYMENT.
Upon any partial prepayment of a Subordinated Note, such Subordinated
Note may, at the option of the holder thereof, be
(a) surrendered to the Company pursuant to Section 6.2 in
exchange for a new Subordinated Note in a principal amount equal to the
principal amount remaining unpaid on the surrendered Subordinated Note,
(b) made available to the Company for notation thereon of the
portion of the principal so prepaid, or
(c) marked by such holder with a notation thereon of the
portion of the principal so prepaid.
In case the entire principal amount of any Subordinated Note is prepaid, such
Subordinated Note shall be surrendered to the Company for cancellation and shall
not be reissued, and no Subordinated Note shall be issued in lieu of the prepaid
principal amount of any Subordinated Note.
5.7 NO OTHER OPTIONAL PREPAYMENTS.
Except as provided in Section 5.2 and in Section 5.3 or in accordance
with an offer made in compliance with Section 7.7 or Section 7.12, the Company
may not make any optional prepayment (whether directly or indirectly by purchase
or other acquisition) in respect of the Subordinated Notes.
5.8 VALUABLE RIGHTS.
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The Company acknowledges, and the parties hereto agree, that the right
of each holder to maintain its investment in the Subordinated Notes free from
repayment by the Company (except as herein specifically provided for) is a
valuable right and that the provision for the payment of the Prepayment
Compensation Amount by the Company in the event that the Subordinated Notes are
prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.
5.9 DELIVERY OF SUBORDINATED NOTES IN PAYMENT OF WARRANT PURCHASE
PRICE.
The Warrant Agreement provides that a holder of Warrants may tender
Subordinated Notes to the Company in partial or complete payment of the purchase
price for the shares of Class B Common Stock issued upon exercise of the
Warrants. Promptly following the receipt of any Subordinated Note so tendered,
the Company shall immediately cancel and retire the same (and no such
Subordinated Note shall be reissued) and shall issue to the holder thereof a new
Subordinated Note in the principal amount or such tendered Subordinated Note
remaining after deduction of the principal amount thereof applied to the payment
of the purchase price for the shares of Class B Common Stock. The Company and
you agree that a tender of Subordinated Notes in payment of the exercise price
in respect of the Warrants shall not be a prepayment nor deemed to be a
prepayment of the Subordinated Notes, but rather a conversion of such
Subordinated Notes, pursuant to the terms of the Warrant Agreement and the
Warrants, into Class B Common Stock.
6. REGISTRATION; SUBSTITUTION OF SUBORDINATED NOTES
6.1 REGISTRATION OF SUBORDINATED NOTES.
The Company shall cause to be kept at the office of its counsel,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, One Cleveland Center, 20th Floor, ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or at its office, maintained pursuant to Section
7.3, or at such other office of such counsel or the Company of which the Company
shall have given written notice to each holder of Subordinated Notes, a register
for the registration and transfer of Subordinated Notes. The name and address of
each holder of one or more Subordinated Notes, each transfer thereof and the
name and address of each transferee of one or more Subordinated Notes shall be
registered in the register. The Person in whose name any Subordinated Note shall
be registered shall be deemed and treated as the owner and holder thereof for
all purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary.
6.2 EXCHANGE OF SUBORDINATED NOTES.
Upon surrender of any Subordinated Note at the office of the Company
maintained pursuant to Section 7.3 duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such
Subordinated Note or his attorney duly authorized in writing, the Company shall
execute and deliver, at the Company's expense (except as provided below), new
Subordinated Notes in exchange therefor, in denominations of at least One
Hundred Thousand Dollars ($100,000) (except as may be necessary to reflect:
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(a) any principal amount not evenly divisible by One Hundred
Thousand Dollars ($100,000);
(b) any Subordinated Note originally issued in an amount
greater than One Hundred Thousand Dollars ($100,000), but with a
remaining unpaid principal amount of less than One Hundred Thousand
Dollars ($100,000); or
(c) any Subordinated Note in a principal amount equal to the
Purchase Price (as such term is defined in the Warrant Agreement) of
any Warrant or Warrants issued for the purpose of permitting the holder
thereof to pay such Purchase Price with a principal amount of
Subordinated Notes);
in an aggregate principal amount equal to the unpaid principal amount of the
surrendered Subordinated Note. Each such new Subordinated Note shall be payable
to such Person as such holder may request and shall be substantially in the form
of Exhibit A. Each such new Subordinated Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered
Subordinated Note or dated the date of the surrendered Subordinated Note if no
interest shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Subordinated Notes.
6.3 REPLACEMENT OF SUBORDINATED NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any
Subordinated Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation) and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such
Subordinated Note is an Institutional Investor, such holder's own
unsecured agreement of indemnity shall be deemed to be satisfactory),
or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Subordinated Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Subordinated
Note or dated the date of such lost, stolen, destroyed or mutilated Subordinated
Note if no interest shall have been paid thereon.
6.4 LIMITATION ON TRANSFERS.
Notwithstanding the foregoing provisions of this Section 6 or any other
provision contained in this Agreement, each holder of Subordinated Notes agrees
that it will not at any time sell, transfer or otherwise convey any of the
Subordinated Notes, or any portion thereof, to any Person which is, at the time
of such sale, transfer or conveyance, a Competitor without the prior written
consent of the Company.
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7. COMPANY BUSINESS COVENANTS
The Company covenants that on and after the Closing Date and so long as
any of the Subordinated Notes shall be outstanding:
7.1 PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each Subsidiary to, pay before they
become delinquent,
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, might
result in the creation of a Lien upon its Property,
provided, that items of the foregoing description need not be paid
(i) while being contested in good faith and by appropriate
proceedings as long as adequate book reserves have been established and
maintained and exist with respect thereto, and
(ii) so long as the title of the Company or the Subsidiary, as
the case may be, to, and its right to use, such Property, is not
materially adversely affected thereby.
7.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.
The Company will, and will cause each Subsidiary to,
(a) PROPERTY -- maintain all Property necessary in its
business in good working order and condition, ordinary wear and tear
excepted, in accordance with past practice;
(b) INSURANCE -- maintain, with financially sound and
reputable insurers, insurance with respect to its Property and business
against such casualties and contingencies, of such types (including,
without limitation, insurance with respect to losses arising out of
Property loss or damage, public liability, business interruption,
larceny, workers' compensation, embezzlement or other criminal
misappropriation) and in such amounts as is customary in the case of
corporations of established reputations engaged in the same or a
similar business and similarly situated;
(c) FINANCIAL RECORDS -- keep proper books of records and
accounts in which full, true and correct entries in conformity in all
material respects with GAAP and all requirements of law shall be made
of all its dealings and transactions in relation to its business and
activities;
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(d)CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done
all things necessary
(i) to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and
franchises, subject to Section 7.6, except where the failure
to do so could not reasonably be expected to have a Material
Adverse Effect; and
(ii) to maintain each Subsidiary as a Subsidiary,
except as otherwise permitted by Section 7.6 and Section
7.7;
provided, that, in each case, the Company shall be permitted to
complete the Subsidiary Restructuring; and
(e) COMPLIANCE WITH LAW -- not be in violation of any law,
ordinance or governmental rule or regulation to which it is subject
(including, without limitation, any Environmental Protection Law) and
not fail to obtain any license, certificate, permit, franchise or other
governmental authorization necessary to the ownership of its Properties
or to the conduct of its business if such violation or failure to
obtain, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
7.3 PAYMENT OF SUBORDINATED NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal of
and interest (and Prepayment Compensation, if any) on, the Subordinated Notes,
as and when the same shall become due according to the terms hereof and of the
Subordinated Notes, and will maintain an office at the address of the Company
set forth in Section 12.1 where notices, presentations and demands in respect
hereof or the Subordinated Notes may be made upon it. Such office will be
maintained at such address until such time as the Company will notify the
holders of the Subordinated Notes of any change of location of such office,
which will in any event be located within the United States of America.
7.4 DEBT RESTRICTIONS.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become
liable with respect to any Debt, except:
(a) SUBORDINATED NOTES -- Debt evidenced by the Subordinated
Notes;
(b) ACCEPTABLE CREDIT FACILITIES -- Debt outstanding from time
to time under Acceptable Credit Facilities in an aggregate amount not
exceeding (except to the extent otherwise permitted pursuant to this
Section 7.4) Sixty Million Dollars ($60,000,000) pursuant to a term
loan facility thereunder plus an amount outstanding under a revolving
credit facility thereunder not in excess of the greater of (x) Twenty
Million Dollars ($20,000,000) and (y) the Maximum Revolver Amount from
time to time;
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(c) CLOSING DATE DEBT -- Debt of the Company and the
Subsidiaries outstanding as of the Closing Date and described on PART
7.4 OF ANNEX 3;
(d) PURCHASE MONEY DEBT -- Debt secured by Purchase Money
Liens used to finance the purchase of Acceptable Property, so long as
the Debt secured by such Purchase Money Lien shall not exceed the
amount equal to the lesser of (x) the cost of acquisition or
construction of the particular Acceptable Property to which such Debt
relates, or (y) the Fair Market Value of such Acceptable Property at
such time;
(e) EXTENSIONS AND RENEWALS -- modifications, extensions,
refundings and refinancings of all or part of any Debt permitted
pursuant to clause (c) and clause (d), inclusive, of this Section 7.4
then outstanding, provided that immediately after giving effect to the
incurrence of such modification, extension, refunding or refinancing,
all of the following conditions are met:
(i) the aggregate principal (or, in the case of
letters of credit, face) amount or commitment amount of the
Debt is not increased in excess of the amount of such Debt
outstanding immediately prior to such modification, extension,
renewal or refinancing; and
(ii) the terms of such Debt so modified, extended,
renewed or refinanced are, in the aggregate, no less favorable
to the Company and/or its Subsidiaries, as the case may be,
than the terms of such Debt prior to such modification,
renewal, extension or refinancing;
(f) BASKET DEBT -- Debt (including without limitation, Debt
pursuant to Acceptable Credit Facilities in excess of the amount
permitted pursuant to Section 7.4(b)) of the Company and the
Subsidiaries not otherwise permitted under the provisions of clause (a)
through clause (e), inclusive, of this Section 7.4 provided that the
aggregate outstanding principal amount of Debt issued pursuant to this
clause (f) shall not at any time exceed Nine Million Dollars
($9,000,000);
(g) INTEREST RATE PROTECTION AGREEMENTS -- Debt of the Company
consisting of obligations under Interest Rate Protection Agreements
entered into in the ordinary course of business, including, without
limitation, the Interest Rate Protection Agreement required by Section
8.11 of the Bank Loan Agreement (as in effect of the Closing Date);
(h) OTHER HEDGING AGREEMENTS -- Debt of the Company under
Other Hedging Agreements, entered into in the ordinary course of
business and consistent with past practices, providing protection
against fluctuations in currency values so long as senior management of
the Company shall have determined that such Other Hedging Agreement is
for bona fide hedging purposes and not for speculative purposes; and
(i) INTERCOMPANY DEBT -- Debt of a Subsidiary owed to the
Company or to any Wholly-Owned Subsidiary or Debt of the Company owed
to a Wholly-Owned Subsidiary;
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(j) ADDITIONAL DEBT -- Debt (including without limitation,
Debt pursuant to Acceptable Credit Facilities in excess of the amount
permitted pursuant to clause (b) of this Section 7.4) not otherwise
permitted under clause (a) through clause (i), inclusive, of this
Section 7.4 provided that immediately after giving effect to the
incurrence of such Debt in accordance with this clause (j) and to the
concurrent retirement of other Debt:
(i) the ratio of Pro Forma Consolidated Net Income
Available for Fixed Charges at such time to Pro Forma Fixed
Charges at such time would not be less than 2.00 to 1.00;
and
(ii) immediately prior to and immediately after the
incurrence of such Debt, and after giving effect thereto, no
Default or Event of Default exists or would exist.
For purposes of this Section 7.4(j), it shall be assumed that:
(I) any Debt proposed to be incurred pursuant to this clause
(j) (and any Debt incurred pursuant to this clause (j) since the
beginning of the period of twelve (12) calendar months most recently
ended at the time of such proposed incurrence) had been incurred on the
first day of such period, and had been outstanding throughout such
period; and
(II) any Debt proposed to be contemporaneously retired with
the proceeds of the Debt proposed to be incurred pursuant to this
clause (j) (and any Debt retired with the proceeds of Debt incurred
pursuant to this clause (j) since the beginning of such period) had
been retired on the first day of such period.
For purposes of this Section 7.4, each Subsidiary created, acquired or formed
after the Closing Date shall be deemed to have incurred all Debt of such
Subsidiary which existed as of the date of the creation, acquisition of or
formation of such corporation as a Subsidiary.
7.5 LIENS.
(a) NEGATIVE PLEDGE. The Company will not, nor will it permit
any Subsidiary to, cause or permit to exist, or agree or consent to
cause or permit to exist in the future (upon the happening of a
contingency or otherwise), any of its Property, whether now owned or
hereafter acquired, to be subject to a Lien except:
(i) ORDINARY COURSE BUSINESS LIENS --
(A) TAXES, ETC. -- Liens securing taxes,
assessments or governmental charges or levies or, to
the extent incurred in the ordinary course of
business of the Company or such Subsidiary, the
claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like
Persons, provided that the payment thereof is not at
the time required by Section 7.1;
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(B) BUSINESS -- Liens incurred or deposits
made in the ordinary course of business
(I) in connection with workers'
compensation, unemployment insurance, social
security, pension and other like laws, and
(II) Liens (other than any Lien
imposed by ERISA) on Property of the Company
or any of the Subsidiaries incurred or
deposits made in the ordinary course of
business of the Company or such Subsidiary,
but not incurred in connection with Debt for
borrowed money, the obtaining of advances or
the payment of the deferred purchase price
of Property, in connection with (x) workers'
compensation, unemployment insurance, social
security, pension or other types of social
security or (y) securing the performance of
tenders, statutory obligations (other than
excise taxes), surety, stay, customs and
appeal bonds, statutory bonds, bids, leases,
government contracts, performance and return
of money bonds and other similar obligations
incurred in the ordinary course of business
(other than any of the foregoing which is of
a type described in Section 7.5(a)(ii)), or
(z) deposits made in the ordinary course of
business to secure liability for premiums to
insurance carriers; and
(C) REAL ESTATE -- Liens in the nature of
reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions,
leases and other similar title exceptions or
encumbrances affecting real Property, including,
without limitation, Permitted Encumbrances (as such
term is defined in the Bank Loan Agreement in effect
on the Closing Date), provided that such exceptions
and encumbrances do not in the aggregate materially
interfere with the use of such Property in the
ordinary conduct of the business of the Company and
the Subsidiaries, taken as a whole;
(ii) JUDICIAL LIENS -- Liens
(A) arising from judicial attachments and
judgments,
(B) securing appeal bonds, supersedeas
bonds, and
(C) arising in connection with court
proceedings (including, without limitation, surety
bonds and letters of credit or any other instrument
serving a similar purpose),
provided, in the case of this Section 7.5(a)(ii), that such
Liens do not constitute an Event of Default or the execution
or other enforcement of such Liens is effectively stayed, the
claims secured thereby are being actively contested in good
faith and
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by appropriate proceedings and adequate book reserves have
been maintained and exist with respect to such claims;
(iii) SENIOR DEBT LIENS -- Liens securing (A)
Acceptable Credit Facilities incurred pursuant to Section
7.4(b) and (B) Swaps incurred pursuant to Section 7.4(g) or
Section 7.4(h);
(iv) INTERGROUP LIENS -- Liens on Property of a
Subsidiary, provided that such Liens secure only obligations
owing to the Company or a Wholly-Owned Subsidiary;
(v) CLOSING DATE LIENS -- Liens in existence on the
Closing Date securing Debt and described on PART 7.5 OF
ANNEX 3;
(vi) PURCHASE MONEY LIENS -- Purchase Money Liens,
if, after giving effect thereto and to any concurrent
transactions the Debt secured by such Purchase Money Lien
shall have been incurred within the limitations of Section
7.4(d);
(vii) ACQUIRED PROPERTY LIENS -- Liens existing on
Acceptable Property acquired by the Company or a Subsidiary
after the Closing Date and Liens existing on Acceptable
Property of a Person at the time such Person becomes a
Subsidiary after the Closing Date, provided that such Lien
(A) was not placed on such Acceptable
Property, and does not secure Debt created, incurred,
issued or assumed, contemporaneously with or in any
manner in contemplation of, the acquisition of such
Acceptable Property or Person by the Company or such
Subsidiary, and
(B) does not extend to any other Property of
the Company or any Subsidiary after such acquisition;
(viii) RENEWALS AND EXTENSIONS -- Liens constituting
extensions, renewals or replacements, in whole or in part, of
Liens permitted pursuant to the foregoing clauses (iii)
through (vii), inclusive, provided that no such extension,
renewal or replacement Lien extends to any Property of the
Company or any Subsidiary other than the Property subject to
the Lien being extended, renewed or replaced, and the
aggregate amount of the obligations secured by such extension,
renewal or replacement Lien does not exceed the amount then
secured by the Lien being extended, renewed or replaced;
(ix) BASKET LIENS -- Liens securing Debt incurred in
accordance with clause (f) or clause (j) of Section 7.4 so
long as such Debt is not, in a liquidation of the assets of
the Company, required to be paid contemporaneously with or
after any payment on the Subordinated Notes;
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(x) MISCELLANEOUS LIENS -- Liens created by licenses,
leases or subleases granted to other Persons in the ordinary
course of business not interfering in any material respect
with the conduct of the business of the Company or any of the
Subsidiaries;
(xi) PRECAUTIONARY FILINGS -- Liens arising from
precautionary informational UCC financing statement filings
regarding operating leases entered into by the Company or any
of the Subsidiaries in the ordinary course of business; or
(xii) EQUAL AND RATABLE LIEN -- Liens on Property of
the Company or a Subsidiary securing obligations so long as
the Company or such Subsidiary shall have, simultaneously with
or prior to the time of the imposition of such Lien,
(A) made or caused to be made provision
whereby the Subordinated Notes are secured equally
and ratably as to such Property with such other
obligations pursuant to such agreements and
instruments as shall be approved by the Required
Holders, and
(B) caused to be delivered to each holder of
a Subordinated Note an opinion of independent counsel
satisfactory to the Required Holders to the effect
that such agreements and instruments are enforceable
in accordance with their terms and that such
agreements and instruments provide the holders of the
Subordinated Notes with Liens on such Property, to
the full extent that, and with the same priority as,
the holder of such other obligations.
(b) FINANCING STATEMENTS. The Company will not, and will not
permit any Subsidiary to, sign or file a financing statement under the
Uniform Commercial Code of any jurisdiction that names the Company or
such Subsidiary as debtor, or sign any security agreement authorizing
any secured party thereunder to file any such financing statement,
except, in any such case, a financing statement filed or to be filed to
perfect or protect a security interest that the Company or such
Subsidiary is entitled to create, assume or incur, or permit to exist,
under the foregoing provisions of this Section 7.5 or to evidence for
informational purposes a lessor's interest in Property leased to the
Company or any such Subsidiary.
(c) LIENS OF SUBSIDIARIES. Each Person which becomes a
Subsidiary after the Closing Date will be deemed to have granted on the
date such Person becomes a Subsidiary all the Liens in existence on its
Property on such date.
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(d) CONSTRUCTION. Nothing in this Section 7.5 shall be
construed to permit the incurrence or existence of any Debt not
otherwise permitted by this Agreement. Nothing in this Agreement that
permits the incurrence or existence of any Debt shall be construed to
permit the incurrence or existence of a Lien securing such Debt unless
such Lien is permitted by this Section 7.5.
7.6 MERGER, CONSOLIDATION, ETC.
The Company will not merge into, consolidate with, or sell, lease,
transfer or otherwise dispose of all or substantially all of its Property to,
any other Person or permit any other Person to consolidate with or merge into it
(except that a Subsidiary may merge into or consolidate with, or sell, lease,
transfer or otherwise dispose of all or substantially all of its Property to,
the Company) provided that the foregoing restriction does not apply to the
merger or consolidation of the Company with, or the sale, lease, transfer or
other disposition by the Company of all or substantially all of its Property to,
another corporation, including, without limitation, a Subsidiary, if:
(a) the corporation that results from such merger or
consolidation or that purchases, leases, or acquires all or
substantially all of such Property (the "SUCCESSOR CORPORATION") is
organized under the laws of the United States of America or any
jurisdiction thereof;
(b) the due and punctual payment of the principal of and
Prepayment Compensation Amount, if any, and interest on all of the
Subordinated Notes, according to their tenor, and the due and punctual
performance and observance of all the covenants in the Subordinated
Notes and this Agreement to be performed or observed by the Company,
are expressly assumed by the Successor Corporation pursuant to such
agreements and instruments with respect to such assumption as shall be
approved by the Required Holders, and the Company causes to be
delivered to each holder of Subordinated Notes an opinion of
independent counsel satisfactory to the Required Holders to the effect
that such agreements and instruments are enforceable in accordance with
their terms and the terms hereof; and
(c) immediately prior to and immediately after the
consummation of any such transaction, and after giving effect thereto,
no Default or Event of Default exists or would exist.
7.7 TRANSFERS OF PROPERTY; SUBSIDIARY STOCK.
(a) TRANSFERS OF PROPERTY. The Company will not, nor will it
permit any Subsidiary to, sell (including, without limitation, any sale
and subsequent leasing as lessee of such Property), lease as lessor,
transfer, or otherwise dispose of, in each case, other than the
granting or creation of any Lien permitted by Section 7.5(a) (and any
subsequent transfer upon the enforcement of any such Lien),
(individually, a "TRANSFER", and collectively "TRANSFERS") any Property
of the Company or any Subsidiary (including, without limitation,
Subsidiary Stock), except:
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(i) ORDINARY COURSE TRANSFERS -- Transfers of
inventory, of obsolete or worn out, or otherwise no longer
useful, Property and of Property without value, in each case
in the ordinary course of business of the Company or such
Subsidiary;
(ii) INTRAGROUP TRANSFERS -- Transfers from a
Subsidiary to the Company or a Wholly-Owned Subsidiary and
Transfers from the Company to a Wholly-Owned Subsidiary;
(iii) SUBSIDIARY STOCK TRANSFERS -- Transfers of
Subsidiary Stock permitted pursuant to the provisions of
Section 7.7(b);
(iv) PERMITTED FACILITY TRANSFERS -- Transfers of the
facilities operated by the Company or a Subsidiary located
at (x) LaVergne, Tennessee, (y) Brook Park, Ohio or (z)
Solon, Ohio; provided that (A) no more than two of such
facilities may be Transferred and (B) in each case, such
Transfers must be to a Person (other than an Affiliate) for
Acceptable Consideration; and
(v) OTHER TRANSFERS -- a Transfer of Property of the
Company or any Subsidiary to a Person so long as the sum of
the contributions (expressed as a percentage and exclusive
of losses) to Consolidated EBITDA for the four (4) fiscal
quarters of the Company then most recently ended prior to
such Transfer of
(A) such Property, plus
(B) each other item of Property of the
Company and the Subsidiaries transferred (other than
in Transfers referred to in the foregoing clause (i),
clause (ii) or clause (iv) or Transfers referred to
in clause (i), clause (ii) or clause (iii) of Section
7.7(b)) from the beginning of such period of four (4)
consecutive fiscal quarters to the date of such
Transfer,
does not exceed ten percent (10%).
Notwithstanding the foregoing, any Transfer of Property shall
be deemed to be excluded from the foregoing provisions of this Section
7.7 (including any calculation made pursuant to Section 7.7(a)(v)) if
such Transfer is to a Person for Acceptable Consideration and within
one hundred eighty (180) days after such Transfer, the Net Proceeds of
such Transfer are applied by the Company or such Subsidiary either (or
in a combination thereof) to:
(1) acquire new Property for use, or which is useful,
in the conduct of the business of the Company or such
Subsidiary; or
(2) prepay or repurchase Senior Debt or Subordinated
Notes, provided that any prepayment or repurchase of Senior
Debt under a facility or arrangement that permits the
reborrowing of such Senior Debt by the Company or the
Subsidiaries shall not be counted under this clause (2)
unless the availability to reborrow such Senior Debt is
permanently reduced by an amount equal to the
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principal amount of such Senior Debt repaid or repurchased
and provided further that if the Company shall elect not to
acquire new Property pursuant to clause (1) above or to
prepay or repurchase Senior Debt pursuant to this clause
(2), or if any Net Proceeds remain after the Company's
application thereof pursuant to clause (1) and/or this
clause 2, the Company shall offer to repurchase, at par,
together with interest accrued to the repurchase date,
Subordinated Notes, pro rata, from all holders of the
Subordinated Notes in an aggregate principal amount that is
not less than the amount equal to the amount of Net
Proceeds, or the remaining balance thereof. If such offer is
accepted by any holder of Subordinated Notes, such
prepayment shall be paid in accordance with Section 5.2(b)
provided that in no event shall the Prepayment Compensation
Amount be payable or paid in connection therewith. Any sums
remaining unapplied after the prepayment of all offers
accepted by the holders of the Subordinated Notes pursuant
to this clause (2) shall, for purposes of this Section
7.7(a), be deemed to have been applied in accordance with
this clause (2); and
immediately before and after the consummation of such Transfer, and
after giving effect thereto, no Default or Event of Default would
exist.
(b) TRANSFERS OF SUBSIDIARY STOCK. The Company will not, nor
will it permit any Subsidiary to, Transfer (including, without
limitation, any Transfer by means of a merger or consolidation) any
shares of the stock (or any warrants, rights or options to purchase
stock or other securities exchangeable for or convertible into stock)
of a Subsidiary (such stock, warrants, rights, options and other
securities herein called "SUBSIDIARY STOCK"), nor will any Subsidiary
issue, sell or otherwise dispose of any shares of its own Subsidiary
Stock, provided that the foregoing restrictions do not apply to:
(i) INTRAGROUP ISSUANCES -- the issuance by a
Subsidiary of shares of its own Subsidiary Stock to either
the Company or a Wholly-Owned Subsidiary;
(ii) INTRAGROUP TRANSFERS -- Transfers by the Company
or a Subsidiary of shares of Subsidiary Stock to the Company
or to a Wholly-Owned Subsidiary;
(iii) DIRECTORS' QUALIFYING SHARES -- the issuance by a
Subsidiary of directors' qualifying shares; and
(iv) OTHER TRANSFERS -- the Transfer of all of the
Subsidiary Stock of a Subsidiary owned by the Company and
the other Subsidiaries if:
(A) such Transfer satisfies all of the
requirements of Section 7.7(a)(v);
(B) in connection with such Transfer the
entire Investment (whether represented by stock,
Debt, claims or otherwise) of the Company and the
other Subsidiaries in such Subsidiary is Transferred
to a Person other than the Company or a Subsidiary
not being simultaneously disposed of or an Affiliate;
and
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(C) the Subsidiary being disposed of has no
continuing Investment in any other Subsidiary not
being simultaneously disposed of or in the Company.
For purposes of determining the contribution to Consolidated EBITDA of
Property constituting Subsidiary Stock being transferred, as provided
in clause (iv) immediately above, such contribution shall (x) be deemed
to be the aggregate contribution of all Property of the Subsidiary that
shall have issued such Subsidiary Stock and (y) take into consideration
the claim, if any, in and to Consolidated EBITDA in respect of the
minority interest owners of such Subsidiary.
7.8 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
The Company will not, and will not permit any Subsidiary to, at any
time declare or make any Restricted Payment (other than the Household Warrant
Redemption and the ▇▇▇▇▇▇ Shareholder Note Prepayments) or Restricted Investment
unless immediately after, and after giving effect to, the proposed Restricted
Payment or Restricted Investment:
(a) the aggregate amount of Restricted Payments declared
during the period of three hundred sixty-five (365) days immediately
preceding the date of such Restricted Payment or Restricted Investment,
as the case may be, would not exceed fifty percent (50%) of
Consolidated Net Income for the fiscal year of the Company then most
recently ended; and
(b) Consolidated Net Worth at such time would exceed fifty
percent (50%) of Consolidated Total Capitalization at such time
determined as of the last day of the most recently ended fiscal quarter
of the Company; and
immediately prior to, and immediately after, and after giving effect to, the
proposed Restricted Payment or Restricted Investment, no Default or Event of
Default exists or would exist. Notwithstanding the foregoing limitations, the
Company may:
(i) pay cash dividends in respect of the Company's Existing
Preferred Stock, provided that immediately prior to and immediately
after, and after giving effect to, such payment no Default or Event of
Default exists or would exist; and
(ii) in connection with the exercise of any put of any Warrant
Shares by the holders of the Warrants or the exercise of the call
option by the Company pursuant to Section 1 or Section 2, respectively,
of the Shareholders' Agreement, pay to the holders of the Warrant
Shares the Put Option Purchase Price or Repurchase Price, as the case
may be, so long as at such time such Warrant Shares are held by holders
of the Subordinated Notes.
7.9 LINE OF BUSINESS.
The Company will not, and will not permit any Subsidiary to, engage in
any business if, as a result thereof, the general nature of the businesses of
the Company and the Subsidiaries, taken
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as a whole, would not be substantially the same as (or reasonably related to)
the businesses of the Company and the Subsidiaries as were conducted on the
Closing Date.
7.10 TRANSACTIONS WITH AFFILIATES.
Except for Permitted Affiliate Transactions, the Company will not, and
will not permit any Subsidiary to, enter into any transaction, including,
without limitation, the purchase, sale or exchange of Property or the rendering
of any service, with any Affiliate, except in the ordinary course of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
7.11 PENSION PLANS.
(a) COMPLIANCE. The Company will, and will cause each ERISA
Affiliate to, at all times with respect to each Pension Plan, make
timely payment of contributions required to meet the minimum funding
standard set forth in ERISA or the IRC with respect thereto, and to
substantially comply with all other applicable provisions of ERISA.
(b) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS.
Except as disclosed in the actuarial reports listed on PART 2.17(A) OF
ANNEX 3, the present value of all employee benefits vested under each
Pension Plan exceeds the assets of such Pension Plan allocable to such
vested benefits as of the most recent actuarial valuation. The Company
or an ERISA Affiliate will continue to fund each of the Pension Plans
in accordance with the minimum funding requirements of ERISA and the
IRC. Except as required by the terms of the applicable collective
bargaining agreement or as required by either ERISA or the IRC, neither
the Company nor an ERISA Affiliate will increase benefits under any
Pension Plan if such benefit increase would cause the present value of
all employee benefits vested under each Pension Plan to exceed the
assets of such Pension Plan allocable to such vested benefits on the
effective date of the benefit increase, in each case determined
pursuant to Section 7.11(c).
(c) VALUATIONS. All assumptions and methods used to determine
the actuarial valuation of vested employee benefits under Pension Plans
and the present value of assets of Pension Plans will be reasonable in
the good faith judgment of the Company and will comply with all
requirements of law.
(d) PROHIBITED ACTIONS. The Company will not, and will not
permit any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such
term is defined in section 406 of ERISA or section 4975 of the
IRC) that would result in the imposition of a tax or penalty
that could reasonably be expected to have a Material Adverse
Effect;
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(ii) incur with respect to any Pension Plan any
"accumulated funding deficiency" (as such term is defined in
section 302 of ERISA), whether or not waived;
(iii) terminate any Pension Plan in a manner that
could result in
(A) the imposition of a Lien on the Property
of the Company or any Subsidiary pursuant to section
4068 of ERISA or
(B) the creation of any liability under
section 4062 of ERISA that could reasonably be
expected to have a Material Adverse Effect;
(iv) fail to make any payment required by section 515
of ERISA that could reasonably be expected to have a
Material Adverse Effect; or
(v) at any time be an "employer" (as such term is
defined in section 3(5) of ERISA) required to contribute to
any Multiemployer Plan if, at such time, it could reasonably
be expected that the Company or any Subsidiary will incur
withdrawal liability in respect of such Multiemployer Plan and
such liability, if incurred, together with the aggregate
amount of all other withdrawal liability as to which there is
a reasonable expectation of incurrence by the Company or any
Subsidiary under any one or more Multiemployer Plans, could
reasonably be expected to have a material adverse effect on
the business, Properties or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or the
ability of the Company to perform its obligations set forth in
the Financing Documents.
(e) FOREIGN PENSION PLANS. The Company will, and will cause
each Subsidiary to, at all times, comply in all material respects with
all laws, regulations and orders applicable to the establishment,
operation, administration and maintenance of all Foreign Pension Plans,
and to pay when due all premiums, contributions and any other amounts
required by applicable Foreign Pension Plan documents or applicable
laws, except where the failure to comply with such laws, regulations
and orders, and to make such payments, in the aggregate for all such
failures, could not reasonably be expected to have a Material Adverse
Effect.
7.12 PRO-RATA OFFERS.
The Company will not, nor will it permit any Subsidiary or any
Affiliate, or any officer or director of any thereof, to, directly or
indirectly, acquire or make any offer to acquire any Subordinated Notes unless
the Company or such Subsidiary, Affiliate, officer or director shall have
offered to acquire Subordinated Notes, pro rata, from all holders of the
Subordinated Notes and upon the same terms. In case the Company acquires any
Subordinated Notes, such Subordinated Notes will thereafter be cancelled and no
Subordinated Notes will be issued in substitution therefor.
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7.13 PRIVATE OFFERING.
The Company will not, nor will it permit any Person acting on its
behalf to, offer the Subordinated Notes or any part thereof or any similar
Securities for issue or sale to, or solicit any offer to acquire any of the same
from, any Person so as to bring the issuance and sale of the Subordinated Notes
within the provisions of section 5 of the Securities Act.
7.14 AMENDMENTS TO ACCEPTABLE CREDIT FACILITIES.
The Company will not agree to any amendment or modification of any
Acceptable Credit Facility which amendment or modification increases the
principal amount of the Debt permitted to be incurred thereunder (other than as
permitted pursuant to Section 7.4). The Company will promptly deliver to each
holder of Subordinated Notes a copy of each amendment or other modification to
or waiver of any provision of any Acceptable Credit Facility and each agreement
or instrument evidencing any other Debt in an aggregate principal amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) of the Company entered
into after the Closing Date.
7.15 PROVISION OF SUBSIDIARY SUBORDINATED GUARANTEES.
Each Person that becomes a Wholly-Owned Domestic Subsidiary after the
Closing Date, and each Subsidiary which is not a Wholly-Owned Domestic
Subsidiary which delivers a guaranty in connection with the obligations incurred
under or pursuant to any Acceptable Credit Facility, shall execute and deliver
to each of the holders of the Subordinated Notes, within thirty (30) days after
the date on which such Person becomes a Wholly-Owned Domestic Subsidiary or such
Subsidiary delivers such guaranty, as the case may be, a Subsidiary Subordinated
Guarantee, in substantially the form of the Exhibit E, and such Subsidiary
Subordinated Guarantee shall remain in effect and enforceable at all times
during which such Person remains a Wholly-Owned Domestic Subsidiary or such
Subsidiary is obligated on such guaranty, except to the extent that such
Subsidiary Subordinated Guarantee is released in accordance with its terms.
8. INFORMATION AS TO COMPANY
8.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Subordinated Notes:
(a) MONTHLY STATEMENTS -- as soon as practicable after the end
of each monthly fiscal period in each fiscal year of the Company,
commencing with the monthly fiscal period of the Company ending August
31, 1995, and in any event within thirty (30) days thereafter,
duplicate copies of the Company's internal monthly operating
statements, including without limitation:
(i) a consolidated balance sheet of the Company and the
Subsidiaries as at the end of such fiscal month, and
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(ii) consolidated statements of income and cash flows
of the Company and the Subsidiaries, for such fiscal month
and for the portion of the fiscal year ending with such
fiscal month,
setting forth in comparative form, the figures for such month and for
the portion of the fiscal year of the Company ended as of such month,
together with the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to monthly financial statements generally;
(b) QUARTERLY STATEMENTS -- as soon as practicable after the
end of each fiscal quarter in each fiscal year of the Company (other
than the last fiscal quarter of each such fiscal year), commencing with
the fiscal quarter of the Company ending September 30, 1995, and in any
event within forty-five (45) days thereafter, duplicate copies of:
(i) consolidated and consolidating balance sheets of
the Company and the Subsidiaries as at the end of such
fiscal quarter, and
(ii) consolidated and consolidating statements of
income, changes in shareholders' equity and cash flows of
the Company and the Subsidiaries, for such fiscal quarter
and (in the case of the second and third fiscal quarters)
for the portion of the fiscal year ending with such fiscal
quarter,
setting forth in comparative form, the figures for such fiscal quarter
and for the portion of the fiscal year of the Company ended as of such
fiscal quarter, together with the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements
generally, and certified as fairly presenting, in all material
respects, the consolidated financial position and results of operations
and cash flows of the Company and the Subsidiaries as at the end of,
and for, such period subject to changes resulting from year-end
adjustments, by a principal financial officer of the Company, it being
understood that the financial statements required to be delivered
pursuant to clause (a) above with respect to the third month of a
fiscal quarter of the Company and the financial statements required to
be delivered pursuant to this clause (b) may be delivered together so
long as all substantive requirements set forth in clause (a) and clause
(b) of this Section have been satisfied, provided that nothing herein
shall be deemed to permit the Company to deliver the financial
statements required by clause (a) above later than thirty (30) days
after the end of any monthly fiscal period and such financial
statements shall be accompanied by the certificate required by Section
8.2;
(c) ANNUAL STATEMENTS -- as soon as practicable after the end
of each fiscal year of the Company, and in any event within one hundred
twenty (120) days thereafter, duplicate copies of:
(i) consolidated and consolidating balance sheets of
the Company and the Subsidiaries, as at the end of such
fiscal year, and
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(ii) consolidated and consolidating statements of
income, and consolidated statements of changes in
shareholders' equity and cash flows of the Company and the
Subsidiaries, for such fiscal year,
setting forth in each case in comparative form the consolidated figures
for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(A) in the case of such consolidated
financial statements, an opinion thereon of
independent certified public accountants of
recognized national standing selected by the Company,
which opinion shall, without qualification, state
that such financial statements present fairly, in all
material respects, the consolidated financial
position of the companies being reported upon and
their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the
examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards, and that
such audit provides a reasonable basis for such
opinion in the circumstances,
(B) a statement from such independent
certified public accountants that such consolidating
statements were prepared using the same work papers
as were used in the preparation of such consolidated
statements, and
(C) the certificates required by Section 8.2
and Section 8.3;
(d) AUDIT REPORTS AND MANAGEMENT LETTERS -- promptly upon
receipt thereof, a copy of each other report (including, without
limitation, any letters to the Company or any Subsidiary from the
Company's or such Subsidiary's auditors concerning the internal
accounting controls of the Company and/or the Subsidiaries) submitted
to the Company or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of
the books of the Company or any Subsidiary;
(e) SEC AND OTHER REPORTS -- promptly upon their becoming
available one copy of each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to stockholders
generally, and of each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal
letters), and each amendment thereto, in respect thereof filed by the
Company or any Subsidiary with, or received by, such Person in
connection therewith from, the National Association of Securities
Dealers, any securities exchange or the Securities and Exchange
Commission or any successor agency;
(f) ERISA -- promptly upon, and in any event within ten (10)
days of, becoming aware of the occurrence of any
(i) Reportable Event or
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(ii) "prohibited transactions" (as such term is defined
in section 406 or section 4975 of the IRC which prohibited
transactions are not exempted from the restrictions imposed
by such Sections by either Section 408 of ERISA, Section
4975 of the IRC, or any pending or final prohibited
transaction exemptions).
in connection with any Pension Plan or any trust created thereunder, a
written notice specifying the nature thereof, what action the Company
is taking or proposes to take with respect thereto, and, when known,
any action taken by the IRS, the Department of Labor or the PBGC with
respect thereto;
(g) ERISA WAIVERS -- prompt written notice of and a
description of any request pursuant to section 303 of ERISA or section
412 of the IRC for, or notice of the granting pursuant to said section
303 or section 412 of, a waiver in respect of all or part of the
minimum funding standard set forth in ERISA or the IRC, as the case may
be, of any Pension Plan, and, in connection with the granting of any
such waiver, the amount of any waived funding deficiency (as such term
is defined in said section 303 or said section 412) and the terms of
such waiver, in each of the cases specified in this clause (g), where
the effect of such conditions or events or of events or conditions
related thereto would reasonably be expected to have a Material Adverse
Effect;
(h) OTHER ERISA NOTICES -- prompt written notice of and, where
applicable, a description of
(i) any notice from the PBGC in respect of the
commencement of any proceedings pursuant to section 4042 of
ERISA to terminate any Pension Plan or for the appointment
of a trustee to administer any Pension Plan,
(ii) any distress termination notice delivered to the
PBGC under section 4041 of ERISA in respect of any Pension
Plan, and any determination of the PBGC in respect thereof,
(iii) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(iv) any Multiemployer Plan becoming "insolvent" (as
such term is defined in section 4245 of ERISA under Title IV
of ERISA,
(v) the whole or partial withdrawal of the Company or
any ERISA Affiliate from any Multiemployer Plan and the
withdrawal liability incurred in connection therewith, and
(vi) the withdrawal of the Company or any ERISA
Affiliate from any Multiple Employer Pension Plan and the
withdrawal liability under ERISA incurred in connection
therewith;
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in each of the cases specified in the foregoing clauses (i) through
(vi), inclusive, where the effect of such conditions or events or of
events or conditions related thereto would reasonably be expected to
have a Material Adverse Effect;
(i) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly upon,
and in any event within two (2) Business Days of, any Senior Officer
becoming aware of the existence of any condition or event which
constitutes a Default or an Event of Default, a written notice
specifying the nature and period of existence thereof and what action
the Company is taking or proposes to take with respect thereto;
(j) NOTICE OF CLAIMED DEFAULT -- promptly upon, and in any
event within two (2) Business Days of, any Senior Officer becoming
aware that the holder of any Subordinated Note, or of any evidence of
Debt or other Security of the Company or any Subsidiary, shall have
given notice or taken any other action with respect to a claimed Event
of Default or default, a written notice specifying the notice given or
action taken by such holder and the nature of the claimed Event of
Default or default and what action the Company is taking or proposes to
take with respect thereto;
(k) CERTAIN ENVIRONMENTAL MATTERS -- prompt written notice of
and a description of any event or circumstance that, had such event or
circumstance occurred or existed prior to the Closing Date, would have
been required to be disclosed as an exception to any statement set
forth in Section 2.19; and
(l) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information as from time to time may be reasonably
requested in writing, including, without limitation, (i) information
required by 17 C.F.R. sec. 230.144A, as amended from time to time, and
(ii) information delivered to any holder or holders of Debt of the
Company (other than the Debt evidenced by the Subordinated Notes)
pursuant to the terms of the loan and credit agreement or other
instrument governing or evidencing such Debt (other than the Fee
Letter).
8.2 OFFICERS' CERTIFICATES.
Each set of financial statements delivered to each holder of
Subordinated Notes pursuant to Section 8.1(b) or Section 8.1(c) shall be
accompanied by a certificate of the chief financial officer of the Company
setting forth:
(a) COVENANT COMPLIANCE -- the information (including
reasonably detailed calculations) required in order to establish
whether the Company was in compliance with the requirements of Section
7.4, Section 7.5, Section 7.7 and Section 7.8 during the period covered
by the income statement then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible
under the terms of such Sections, and the calculation of the amounts,
ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that the signer has
reviewed the relevant terms hereof and has made, or caused to be made,
under such officer's supervision, a
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review of the transactions and conditions of the Company and the
Subsidiaries from the beginning of the accounting period covered by the
income statements being delivered therewith to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event which constitutes a
Default or an Event of Default or, if any such condition or event
existed or exists, specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to
take with respect thereto.
8.3 ACCOUNTANTS' CERTIFICATES.
Each set of annual financial statements delivered pursuant to Section
8.1(c) shall be accompanied by a certificate of the accountants who certify such
financial statements, stating that they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event which then constitutes a Default or an Event of Default,
and, if such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof.
8.4 INSPECTION.
The Company will permit the representatives of the Purchasers and each
other holder of at least ten percent (10%) in principal amount of Subordinated
Notes at the time outstanding (exclusive of Subordinated Notes then owned by any
one or more of the Company, any Subsidiary or any Affiliate) at the expense of
such Purchaser or holders (or, if a Default or Event of Default shall exist at
such time, at the expense of the Company), to visit and inspect any of the
Properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants (and by
this provision the Company authorizes said accountants to discuss the finances
and affairs of the Company and the Subsidiaries) all at such reasonable times
during the regular business hours and without interference of the ordinary
course of business and as often as may be reasonably requested. The Company
shall be permitted to accompany such representatives on such visits and
inspections of any of the Properties.
9. EVENTS OF DEFAULT
9.1 NATURE OF EVENTS.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) PRINCIPAL OR PREPAYMENT COMPENSATION AMOUNT -- the Company
shall fail to make any payment of the principal or the Prepayment
Compensation Amount on any Subordinated Note on or before the date such
payment is due;
(b) INTEREST PAYMENTS -- the Company shall fail to make any
payment of interest on any Subordinated Note on or before the date five
(5) days after the date such payment is due;
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(c) COVENANT DEFAULTS -- the Company or any Subsidiary shall
fail to comply (i) with the provisions of Section 7.4 through and
including Section 7.8 or (ii) in any material respect with any other
provision hereof, and, in each case, such failure continues for more
than thirty (30) days after such failure shall first become known to
any Senior Officer;
(d) WARRANTIES OR REPRESENTATIONS -- any warranty,
representation or other statement by the Company, or of any Subsidiary,
contained herein, in the Warrant Agreement, any Subsidiary Subordinated
Guarantee or in any instrument furnished after the Closing Date in
compliance with or in reference hereto shall have been false or
misleading except for such false or misleading warranties,
representations or statements which could not, in the aggregate, be
reasonably expected to have a Material Adverse Effect;
(e) PAYMENTS ON ACCEPTABLE CREDIT FACILITY -- the Company or
any Subsidiary shall fail to make any payment on any Acceptable Credit
Facility when due and such payment default is not cured or waived
within thirty (30) days of the date such payment was originally due;
(f) FAILURE TO PREPAY SENIOR DEBT OR OBTAIN CONSENT -- in
connection with a Change in Control in which any holder of Subordinated
Notes at the time outstanding has accepted the prepayment offer
pursuant to Section 5.3(b), the Company shall have failed to either (i)
prepay in full, on or before the Business Day immediately preceding the
Control Prepayment Date with respect to such Change in Control, all
Senior Debt then outstanding or (ii) obtain, and deliver to the holders
of the Subordinated Notes, the Control Prepayment Consent as provided
in Section 5.3(d);
(g) ACCELERATION OF DEBT -- any event shall occur or any
condition shall exist in respect of not less than Four Million Dollars
($4,000,000) in aggregate amount of any Debt of the Company or any
Subsidiary (other than the Subordinated Notes), or under any agreement
securing or relating to such Debt, that
(i) causes such Debt to become due prior to its stated
maturity or prior to its regularly scheduled date or dates
of payment; or
(ii) permits any one or more of the holders thereof or
a trustee or agent therefor to require the Company or such
Subsidiary to repurchase such Debt from such holder and one
or more of such holders having not less than Four Million
Dollars ($4,000,000) in the aggregate amount of such Debt
shall have required such repurchase;
(h) INVOLUNTARY BANKRUPTCY PROCEEDINGS --
(i) a receiver, liquidator, custodian or trustee of the
Company or any Material Subsidiary, or of all or any
substantial part of the Property of any of such Persons,
shall be appointed by court order and such order remains in
effect for more than sixty (60) days; or an order for relief
shall be entered with respect to the
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Company or any Subsidiary, or the Company or any Material
Subsidiary shall be adjudicated a bankrupt or insolvent; or
(ii) a substantial part of the Property of such Persons
shall be sequestered by court order and such order remains
in effect for more than sixty (60) days; or
(iii) a petition shall be filed against the Company or
any Material Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and shall not be
dismissed within sixty (60) days after such filing;
(i) VOLUNTARY PETITIONS -- the Company or any Material
Subsidiary shall file a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or shall consent to the filing of any petition against it under
any such law;
(j) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Company
or a Material Subsidiary shall make a general assignment for the
benefit of its creditors, or shall consent to the appointment of a
receiver, liquidator or trustee of the Company or a Material Subsidiary
or of all or any substantial part of the Property of any of such
Persons; or
(k) UNDISCHARGED FINAL JUDGMENTS -- a final judgment or final
judgments for the payment of money aggregating in excess of Four
Million Dollars ($4,000,000) (net of any insurance coverage or the
amount of any creditworthy third-party indemnification as to which the
relevant insurer or such third-party, as the case may be, has agreed in
writing is applicable to such judgment or judgments) is or are
outstanding against one or more of the Company and the Subsidiaries
and:
(i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment, or
(ii) any one of such judgments shall have been
outstanding for more than thirty (30) days from the date of
its entry and shall not have been discharged in full or
stayed.
If any action, condition, event or other matter would, at any time, constitute
an Event of Default under any provision of this Section 9.1, then an Event of
Default shall exist, regardless of whether the same or a similar action,
condition, event or other matter is addressed in a different provision of this
Section 9.1 and would not constitute an Event of Default at such time under such
different provision.
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9.2 DEFAULT REMEDIES.
(A) ACCELERATION ON EVENT OF DEFAULT.
(i) If an Event of Default specified in clause (h),
(i) or (j) of Section 9.1 shall exist with respect to the
Company, all of the Subordinated Notes at the time outstanding
shall automatically become immediately due and payable
together with interest accrued thereon and, to the extent
permitted by law, the Prepayment Compensation Amount at such
time with respect to the principal amount of such Subordinated
Notes, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and,
(ii) If an Event of Default (other than an Event of
Default with respect to the Company specified in clause (h),
(i) or (j) of Section 9.1) shall exist, the holders of at
least sixty-six and two-thirds percent (66-2/3%) in principal
amount of the Subordinated Notes then outstanding (exclusive
of Subordinated Notes then owned by any one or more of the
Company, any Subsidiary or any Affiliate) may exercise any
right, power or remedy permitted to such holder or holders by
law, and shall have, in particular, without limiting the
generality of the foregoing, the right to declare the entire
principal of, and all interest accrued on, all the
Subordinated Notes then outstanding to be, and such
Subordinated Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived,
and the Company shall forthwith pay to the holder or holders
of all the Subordinated Notes then outstanding the entire
principal of, and interest accrued on, the Subordinated Notes
and, to the extent permitted by law, the Prepayment
Compensation Amount at such time with respect to such
principal amount of such Subordinated Notes.
(b) ACCELERATION ON PAYMENT DEFAULT. During the existence of
an Event of Default described in Section 9.1(a) or Section 9.1(b), and
irrespective of whether the Subordinated Notes then outstanding shall
have been declared to be due and payable pursuant to Section
9.2(a)(ii), any Purchaser who is a holder of Subordinated Notes at such
time, or any holder or holders of at least twenty-five percent (25%) in
principal amount of the Subordinated Notes at the time outstanding
(exclusive of Subordinated Notes then owned by any one or more of the
Company, any Subsidiary, any Affiliate and any officer or director of
any thereof), who or which shall have not consented to any waiver with
respect to such Event of Default may, at its option, by notice in
writing to the Company, declare the Subordinated Notes then held by
such holder or holders to be, and such Subordinated Notes shall
thereupon become, forthwith due and payable together with all interest
accrued thereon, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, and the
Company shall forthwith pay to such holder or holders the entire
principal of and interest accrued on such Subordinated Notes and, to
the extent permitted by law, the Prepayment Compensation Amount at such
time with respect to such principal amount of such Subordinated Notes.
(c) OTHER REMEDIES. Subject to Section 10, during the
existence of an Event of Default and irrespective of whether the
Subordinated Notes then outstanding shall have
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been declared to be due and payable pursuant to Section 9.2(a)(ii) and
irrespective of whether any holder of Subordinated Notes then
outstanding shall otherwise have pursued or be pursuing any other
rights or remedies, any Purchaser who is a holder of Subordinated Notes
at such time, or any holder or holders of at least twenty-five percent
(25%) in principal amount of the Subordinated Notes at the time
outstanding (exclusive of Subordinated Notes then owned by any one or
more of the Company, any Subsidiary, any Affiliate and any officer or
director of any thereof), may proceed to protect and enforce its rights
hereunder and under such Subordinated Notes by exercising such remedies
as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any agreement contained herein or in aid of the
exercise of any power granted herein, provided that the maturity of
such holder's Subordinated Notes may be accelerated only in accordance
with Section 9.2(a) and Section 9.2(b).
(d) NONWAIVER AND EXPENSES. No course of dealing on the part
of any holder of Subordinated Notes nor any delay or failure on the
part of any holder of Subordinated Notes to exercise any right shall
operate as a waiver of such right or otherwise prejudice such holder's
rights, powers and remedies. If the Company shall fail to pay when due
any principal of, or the Prepayment Compensation Amount or interest on,
any Subordinated Note, or shall fail to comply with any other provision
hereof, the Company shall pay to each holder of Subordinated Notes, to
the extent permitted by law, such further amounts as shall be
sufficient to cover the costs and expenses, including but not limited
to reasonable attorneys' fees, incurred by such holder in collecting
any sums due on such Subordinated Notes or in otherwise assessing,
analyzing or enforcing any rights or remedies that are or may be
available to it.
9.3 ANNULMENT OF ACCELERATION OF SUBORDINATED NOTES.
If a declaration is made pursuant to Section 9.2(a)(ii), then and in
every such case, the Required Holders may, by written instrument filed with the
Company, rescind and annul such declaration, and the consequences thereof,
provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree in respect of such declaration shall
have been entered for the payment of any moneys due on or pursuant
hereto or the Subordinated Notes;
(b) all arrears of interest upon all the Subordinated Notes
and all other sums payable hereunder and under the Subordinated Notes
(except any principal of, or interest or the Prepayment Compensation
Amount on, the Subordinated Notes which shall have become due and
payable by reason of such declaration under Section 9.2(a)(ii)) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall
have been waived pursuant to Section 12.6 or otherwise made good or
cured,
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and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
10. SUBORDINATION OF SUBORDINATED NOTES
10.1 GENERAL.
The Subordinated Debt is subordinate and junior in right of payment to
all Senior Debt to the extent provided in this Section 10.
10.2 DEFAULT IN RESPECT OF SENIOR DEBT.
(a) In the event the Company shall default in the payment of
Senior Debt under any Acceptable Credit Facility when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment
or by declaration or otherwise, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no
direct or indirect payment (in cash, Property or Securities or by
set-off or otherwise) shall be made or agreed to be made on account of
any Subordinated Debt, or as a sinking fund for any Subordinated Debt,
or in respect of any redemption, retirement, purchase or other
acquisition of any Subordinated Debt.
(b) Upon the happening of any Senior Debt Covenant Default,
then, unless and until such Senior Debt Covenant Default shall have
been cured or waived or shall have ceased to exist, no direct or
indirect payment (in cash, Property or Securities or by set-off or
otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or
in respect of any redemption, retirement, purchase or other acquisition
of any Subordinated Debt, during any period of up to one hundred eighty
(180) days after written notice of such Senior Debt Covenant Default
shall have been given to the Company by any holder of Senior Debt under
an Acceptable Credit Facility, provided that in no event shall such
payment be prohibited for more than one hundred eighty (180) days in
any three hundred sixty (360) day period and in all events such
payments will be permitted during at least one hundred eighty (180)
days during each three hundred sixty (360) day period.
(c) The Company shall give prompt notice to each holder of
Subordinated Debt of its receipt of any notice under or with respect to
Section 10.2(a) or Section 10.2(b).
10.3 INSOLVENCY, ETC.
In the event of:
(a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its Property;
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(b) any proceeding for the liquidation, dissolution or other
winding-up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings;
(c) any assignment by the Company for the benefit of creditors;
or
(d) any other marshalling of the assets of the Company;
all Senior Debt (including any interest thereon accruing after the commencement
of any such proceedings, whether or not such interest is allowed as a claim in
such proceedings) shall first be paid in full in cash before any payment or
distribution, whether in cash, Securities or other Property, shall be made to
any holder of any Subordinated Debt on account of any Subordinated Debt. Any
payment or distribution, whether in cash, Securities or other Property (other
than Securities of the Company or any other corporation provided for by a plan
or reorganization or readjustment the payment of which is subordinated, at least
to the extent provided in this Section 10 with respect to Subordinated Debt, to
the payment of all Senior Debt at the time outstanding and to any Securities
issued in respect thereof under any such plan or reorganization or
readjustment), which would otherwise (but for this Section 10) be payable or
deliverable in respect of Subordinated Debt shall be paid or delivered directly
to the holders of Senior Debt in accordance with the priorities then existing
among such holders until all Senior Debt (including any interest thereon
accruing after the commencing of any such proceedings, whether or not such
interest is allowed as a claim in such proceedings) shall have been paid in full
in cash. Each holder of any Subordinated Debt agrees duly and promptly to take
such action as may be reasonably requested at any time or from time to time by
the holders of Senior Debt, to file appropriate proofs of claim in respect of
such Subordinated Debt, and to execute and deliver such similar documents as may
be necessary or advisable to enable holders of the Senior Debt to enforce any
and all claims upon or in respect of Subordinated Debt and to receive any and
all payments or distributions to the extent required above.
10.4 TURNOVER OF PAYMENTS.
If:
(a) any payment or distribution shall be collected or received by
any holders of Subordinated Debt in contravention of any of the terms
of this Section 10 and prior to the payment in full in cash of the
Senior Debt at the time outstanding; and
(b) any holder of such Senior Debt shall have notified such
holders of Subordinated Debt, within three hundred sixty-five (365)
days of any such payment or distribution, of the facts by reason of
which such collection or receipt so contravenes this Section 10;
then such holders of Subordinated Debt will deliver such payment or
distribution, to the extent necessary to pay all such Senior Debt in full in
cash, to the holders of such Senior Debt and, until so delivered, the same shall
be held in trust by such holders of Subordinated Debt as the property of the
holders of such Senior Debt. If after any amount is delivered to the holders of
Senior Debt pursuant to this Section 10.4, whether or not such amounts have been
applied to the payment of
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Senior Debt, and the outstanding Senior Debt shall thereafter be paid in full in
cash by the Company or otherwise other than pursuant to this Section 10.4, the
holders of Senior Debt shall return to such holders of Subordinated Debt an
amount equal to the amount delivered to such holders of Senior Debt pursuant to
this Section 10.4.
10.5 OBLIGATIONS NOT IMPAIRED.
No present or future holder of any Senior Debt shall be prejudiced in
the right to enforce subordination of Subordinated Debt by any act or failure to
act on the part of the Company. Nothing contained in this Section 10 shall
impair, as between the Company and any holder of Subordinated Debt, the
obligation of the Company to pay to such holder the principal thereof and the
Prepayment Compensation Amount, if any, and interest thereon as and when the
same shall become due and payable in accordance with the terms thereof, or
prevent any holder of any Subordinated Debt from exercising all rights, powers
and remedies otherwise permitted by applicable law or under this Agreement, all
subject to the rights of the holders of the Senior Debt to receive cash,
Securities or other Property otherwise payable or deliverable to the holders of
Subordinated Debt.
10.6 PAYMENT OF SENIOR DEBT; SUBROGATION.
Upon the payment in full in cash of all Senior Debt, the holders of
Subordinated Debt shall be subrogated to all rights of any holder of Senior Debt
to receive any further payments or distributions applicable to the Senior Debt
until the Subordinated Debt shall have been paid in full in cash, and such
payments or distributions received by the holders of Subordinated Debt by reason
of such subrogation, of cash, Securities or other Property which otherwise would
be paid or distributed to the holders of Senior Debt, shall, as between the
Company and its creditors other than the holders of Senior Debt, on the one
hand, and the holders of Subordinated Debt, on the other hand, be deemed to be a
payment by the Company on account of Senior Debt and not on account of
Subordinated Debt.
10.7 RELIANCE OF HOLDERS OF SENIOR DEBT.
Each holder of Subordinated Debt by its acceptance thereof shall be
deemed to acknowledge and agree that the foregoing subordination provisions are,
and are intended to be, an inducement to and a consideration of each holder of
any Senior Debt, whether such Senior Debt was created or acquired before or
after the creation of Subordinated Debt, to acquire and hold, or to continue to
hold, such Senior Debt, and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, such Senior Debt.
10.8 REINSTATEMENT OF SUBORDINATION.
The obligations of each holder of Subordinated Debt under the
provisions set forth in this Section 10 shall continue to be effective, or be
reinstated, as the case may be, as to any payment in respect of any Senior Debt
that is rescinded or must otherwise be returned by the holder of such Senior
Debt upon the occurrence or as a result of any bankruptcy or judicial
proceeding, all as
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though such payment had not been made, and provided that such payment is
returned to the bankruptcy estate of the Company.
11. INTERPRETATION OF THIS AGREEMENT
11.1 TERMS DEFINED.
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
ACCEPTABLE CONSIDERATION -- means with respect to any Transfer of any
Property, consideration received in connection with such Transfer which is
determined by the Board of Directors, in its good faith opinion, to be equal to
or in excess of the Fair Market Value of such Property and at least seventy
percent (70%) of such consideration is in cash.
ACCEPTABLE CREDIT FACILITY -- means the Bank Loan Agreement and the
other Bank Documents, in each case as amended (including by any amendment and
restatement), supplemented, modified or extended from time to time including
each loan or credit agreement and other related agreements extending the
maturity of, replacing, refinancing, refunding, or otherwise restructuring
(including, without limitation, increasing the amount of the available
borrowings thereunder provided that any such increase is permitted under Section
7.4), in whole or in part, the Debt under the Bank Loan Agreement or any other
Acceptable Credit Facility, whether by the same or any other agent, lender or
group of lenders, so long as, but only so long as the aggregate amount of Debt
incurred pursuant to such loan or credit agreement is, at the time of incurrence
thereof, permitted to be incurred pursuant to Section 7.4.
ACCEPTABLE PROPERTY -- means any plant (including land and
improvements), machinery and equipment used or useful in the ordinary course of
the business of the Company or any Subsidiary and which Property is acquired or
constructed (including by means of Capital Lease) by the Company or such
Subsidiary after the Closing Date.
ACCOUNTS RECEIVABLE -- means the receivables of the Company and the
Subsidiaries described as "Eligible Receivables" in an Acceptable Credit
Facility.
ACQUISITION -- means the acquisition and purchase of all of the issued
and outstanding capital stock of ▇▇▇▇▇▇▇ by the Company.
ACQUISITION DOCUMENTS -- Section 2.22(b).
AFFILIATE -- means, at any time, a Person (other than a Subsidiary or
a Purchaser)
(a) that directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common
Control with, the Company,
(b) that beneficially owns or holds five percent (5%) or more of
any class of the Voting Stock of the Company,
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(c) five percent (5%) or more of the Voting Stock (or in the case
of a Person that is not a corporation, five percent (5%) or more of
the equity interest) of which is beneficially owned or held by the
Company or a Subsidiary, or
(d) that is an officer or director (or a member of the immediate
family of an officer or director) of the Company or any Subsidiary,
at such time.
AGREEMENT, THIS -- means this Senior Subordinated Note and Warrant
Purchase Agreement, as it may be amended from time to time.
BANKS -- means the lending institutions party to the Bank Loan
Agreement from time to time.
BANK DOCUMENTS -- Section 2.21(a).
BANK LOAN AGREEMENT -- means the Credit Agreement, dated as of June 30,
1995 among the Company, the Banks and Bankers Trust Company, as agent
thereunder, as such agreement is amended (including any amendment and
restatement thereof), modified, supplemented or extended from time to time in a
manner not inconsistent with Section 7.4 and Section 7.14.
BOARD OF DIRECTORS -- means, at any time, the board of directors of the
Company or any committee thereof which, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.
BUSINESS DAY -- means, at any time, a day other than a Saturday, a
Sunday or, in the case of any Subordinated Note with respect to which the
provisions of Section 4.1 are applicable, a day on which the bank designated (by
the holder of such Subordinated Note) to receive (for such holder's account)
payments on such Subordinated Note is required by law (other than a general
banking moratorium or holiday for a period exceeding four (4) consecutive days)
to be closed.
CAPITAL LEASE -- means, at any time, a lease with respect to which the
lessee is required by GAAP to recognize the acquisition of an asset and the
incurrence of a liability at such time.
CERTIFICATE OF MERGER -- means the Certificate of Merger with respect
to the merger of ▇▇▇▇▇▇ with and into ▇▇▇▇▇▇ Holdings.
CHANGE IN CONTROL -- at any time means
(a) a sale, assignment, transfer or other disposition of the
capital stock of the Company such that Management Stockholders, in the
aggregate, shall cease to have, directly or indirectly, beneficial
ownership of more than forty percent (40%) of the Issuable Shares, or
(b) the merger or consolidation of the Company with or into
another Person if, after giving effect to such merger or
consolidation, Management Stockholders, in the
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aggregate, do not have, directly or indirectly, beneficial ownership of
more than forty percent (40%) of the capital stock of the surviving
entity.
CLASS A COMMON STOCK -- means the "Class A Common Stock" as defined in
the Warrant Agreement.
CLASS B COMMON STOCK -- means the "Class B Common Stock" as defined in
the Warrant Agreement.
CLOSING -- Section 1.3.
CLOSING DATE -- Section 1.3.
COMMON STOCK -- means the "Common Stock" as defined in the Warrant
Agreement.
COMPANY -- has the meaning specified in the introductory sentence
hereof.
COMPETITOR -- means, at any time, any Person that is engaged at such
time in a principal line of business which is substantially the same as, or
substantially similar to, any of the businesses in which the Company and the
Subsidiaries were engaged in on the Closing Date. Notwithstanding the foregoing,
"Competitor" shall not include any of the Purchasers, or (A) any (1) subsidiary
or affiliate of any Purchaser, (2) insurance company, (3) bank or savings and
loan association, (4) investment company (collectively, the "Institutional
Investors"), the primary businesses of which are any one or more of insurance,
the investment of funds as principal or on behalf of third parties, or the
providing of other financial services and (B) any broker, dealer or similar
intermediary that has acquired the Subordinated Notes for resale to
Institutional Investors.
CONSOLIDATED DEBT -- means, at any time, the aggregate amount of all
Debt of the Company and the Subsidiaries at such time without giving effect to
any intercompany items among such Persons.
CONSOLIDATED EBITDA -- means, for any period, the sum of
(a) Consolidated Net Income, plus
(b) to the extent, and only to the extent, that such
aggregate amount was deducted in the computation of
Consolidated Net Income for such period ,the aggregate amount
of
(i) federal, state and local income taxes,
(ii) Consolidated Interest Expense,
(iii) amortization (including, without limitation,
amortization of original issue discount) and depreciation,
(iv) other noncash charges,
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in each case accrued for such period by the Company and the Subsidiaries
determined on a consolidated basis.
CONSOLIDATED FIXED CHARGES -- means, for any period, the sum of
(a) Consolidated Interest Expense, plus
(b) Consolidated Operating Rental Expense,
in each case, for such period.
CONSOLIDATED INTEREST EXPENSE -- means, for any period, the aggregate
amount of interest accrued or capitalized on, or with respect to, Consolidated
Debt for such period, including, without limitation, imputed interest on Capital
Leases and interest on the Subordinated Notes, but excluding any amortization of
debt discount.
CONSOLIDATED NET INCOME -- means, with respect to any fiscal period,
net earnings (or loss) after income taxes of the Company and the Subsidiaries
for such period, determined on a consolidated basis for such Persons, but
excluding:
(a) net earnings (or loss) of any Subsidiary accrued prior
to the date it became a Subsidiary;
(b) any gain or loss (net of tax effects applicable thereto)
resulting from the sale, conversion or other disposition of
capital assets other than in the ordinary course of business;
(c) any extraordinary, unusual or nonrecurring gains or
losses;
(d) any gain arising from any reappraisal or write-up of
assets;
(e) any portion of the net earnings of any Subsidiary that
for any reason is unavailable for payment of dividends to the
Company or a Subsidiary;
(f) any gain or loss (net of tax effects applicable thereto)
during such period resulting from the receipt of any proceeds of
any insurance policy (other than proceeds of insurance policies
in respect of business interruption of the Company or any
Subsidiary);
(g) any earnings of any Person acquired by the Company or
any Subsidiary through purchase, merger or consolidation or
otherwise, or earnings of any Person substantially all of whose
assets have been acquired by the Company or any Subsidiary, for
any period prior to the date of acquisition;
(h) net earnings of any Person (other than a Subsidiary) in
which the Company or any Subsidiary shall have an ownership
interest unless such net earnings shall have actually been
received by the Company or such Subsidiary in the form of cash
distributions;
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(i) any restoration during such period to income of any
contingency reserve, except to the extent that provision for such
reserve was made during such period out of income accrued during
such period;
(j) any gain arising from the acquisition of any Securities
of the Company or any Subsidiary;
(k) any portion of earnings attributable to minority
interests in Subsidiaries; and
(l) any portion of the net earnings of the Company that
cannot be freely converted into United States dollars.
CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES -- means, for any
period, the sum of
(a) Consolidated Net Income for such period plus
(b) to the extent, and only to the extent, that such
aggregate amount was deducted in the computation of Consolidated
Net Income for such period ,the aggregate amount of
(i) federal, state and local income taxes,
(ii) Consolidated Fixed Charges,
(iii) amortization (including, without limitation,
amortization of original issue discount),
in each case accrued for such period by the Company and the
Subsidiaries determined on a consolidated basis.
CONSOLIDATED NET WORTH -- means, at any time, total stockholders'
equity of the Company and the Subsidiaries at such time as would appear on a
consolidated balance sheet for such Persons prepared in accordance with GAAP.
CONSOLIDATED OPERATING RENTAL EXPENSE -- means, for any period, the
aggregate amount of Operating Rentals payable by the Company and the
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP. For purposes of this definition, it shall be assumed that:
(a) any Operating Lease which commenced after the beginning
of such period had commenced on the first day of such period and
had been in effect throughout such period; and
(b) any Operating Lease which terminated or expired after
the beginning of such period had terminated or expired on the
first day of such period.
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CONSOLIDATED TOTAL CAPITALIZATION -- means, at any time, the sum of (a)
Consolidated Net Worth, plus (b) Consolidated Debt, in each case determined at
such time.
CONTROL -- means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
CONTROL PREPAYMENT CONSENT -- Section 5.3(d).
CONTROL PREPAYMENT DATE -- Section 5.3(a).
DEBT -- means, at any time, with respect to any Person, without
duplication:
(a) its liabilities for borrowed money (whether or not
evidenced by a promissory note or a security);
(b) any liabilities for borrowed money secured by any Lien
existing on Property owned by such Person (whether or not such
liabilities have been assumed);
(c) any obligations in respect of any Capital Lease of such
Person;
(d) the present value of all payments due under any
arrangement for retention of title or any conditional sale
agreement (other than a Capital Lease) discounted at the implicit
rate, if known, with respect thereto or, if unknown, at eight
percent (8%) per annum;
(e) all obligations of such Person in respect of banker's
acceptances, other acceptances, letters of credit and other
instruments serving a similar function issued or accepted by
banks and other financial institutions for the account of such
Person (whether or not incurred in connection with the borrowing
of money);
(f) all Swaps of such Person; and
(g) any Guaranty of such Person of any obligation or
liability of another Person of a type described in any of clause
(a) through clause (f), inclusive of this definition.
DEFAULT -- means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
DISPOSED OF BUSINESS -- means, at any time, any business (which may be
a corporation (including a former Subsidiary, or a division thereof, a
partnership, sole proprietorship, limited liability company or other entity)
which shall have been sold or otherwise disposed of prior to such time by the
Company or any Subsidiary and with respect to which the Company or any
Subsidiary shall not have retained any interest in the equity Securities therein
or any Property thereof.
ELIGIBLE ACCOUNTS RECEIVABLE AMOUNT -- means, at any time, the amount
equal to ninety percent (90%) of the aggregate book value of Accounts Receivable
of the Company and the Subsidiaries at such time.
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ELIGIBLE INVENTORY AMOUNT -- means, at any time, an amount equal to
sixty percent (60%) of the aggregate book value of the Inventory of the Company
and the Subsidiaries at such time.
EMPLOYMENT AGREEMENTS -- means those certain separate Employment
Agreements between the Company and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, in each case dated June 30, 1995.
ENVIRONMENTAL PROTECTION LAW -- means any federal, state, county,
regional or local law, statute, or regulation (including, without limitation,
CERCLA, RCRA and ▇▇▇▇) enacted in connection with or relating to the protection
or regulation of the environment, including, without limitation, those laws,
statutes, and regulations regulating the disposal, removal, production, storing,
refining, handling, transferring, processing, or transporting of Hazardous
Substances, and any regulations, issued or promulgated in connection with such
statutes by any Governmental Authority and any orders, decrees or judgments
issued by any court of competent jurisdiction in connection with any of the
foregoing.
As used in this definition:
CERCLA -- means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time
(by ▇▇▇▇ or otherwise), and all rules and regulations promulgated in
connection therewith;
RCRA -- means the Resource Conservation and Recovery Act of
1976, as amended, and any rules and regulations issued in connection
therewith; and
▇▇▇▇ -- means the Superfund Amendments and Reauthorization Act
of 1986, as amended from time to time, and all rules and regulations
promulgated in connection therewith.
EQUITY DOCUMENTS -- Section 2.21(d).
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA AFFILIATE -- means any corporation or trade or business that,
with respect to the Company,
(a) is a member of the same controlled group of corporations
(within the meaning of section 414(b) of the IRC) of the Company,
or
(b) is under common control (within the meaning of section
414(c) of the IRC) with the Company.
EVENT OF DEFAULT -- Section 9.1.
EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended.
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EXISTING INTANGIBLES -- Section 2.8.
EXISTING PREFERRED STOCK -- shall mean the Series A Preferred Stock of
the Company, $.01 par value, with a liquidation preference of $1,000.00 per
share and the Series B Preferred Stock of the Company, $.01 par value, with a
liquidation preference of $1,000.00 per share, in each case, as issued and
outstanding on the Closing Date pursuant to the terms of the certificate of
incorporation of the Company (as in effect on the Closing Date).
FAIR MARKET VALUE -- means, at any time with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer, and an informed and willing
seller, under no compulsion to buy or sell, respectively.
FEE LETTER -- Section 2.21(a).
FINANCING DOCUMENTS -- means the Note Purchase Agreements, the
Subordinated Notes, the Warrant Agreement, the Warrants, the Warrant
Certificates, the Shareholders' Agreement and the other agreements and
instruments to be executed pursuant to the terms of each of such Financing
Documents, as each may be amended from time to time.
FOREIGN PENSION PLAN -- means any plan, fund or other similar program
(a) established or maintained outside of the United States
of America by any one or more of the Company or the Subsidiaries
primarily for the benefit of the employees (substantially all of
whom are aliens not residing in the United States of America) of
the Company or such Subsidiaries, which plan, fund or other
similar program provides for retirement income for such employees
or results in a deferral of income for such employees in
contemplation of retirement, and
(b) not otherwise subject to ERISA.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
GOVERNMENTAL AUTHORITY -- means
(a) the government of
(i) the United States of America and any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business or which
asserts jurisdiction over the affairs of such Person or its
Property, or
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(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any
such government.
GUARANTY -- means with respect to any Person (for the purposes of this
definition, the "GUARANTOR") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person (the "PRIMARY OBLIGOR") in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by the Guarantor:
(a) to purchase such indebtedness or obligation or any
Property or assets constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such indebtedness or
obligation, or
(ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary
Obligor or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(c) to lease Property or to purchase Securities or other
Property or services primarily for the purpose of assuring the
owner of such indebtedness or obligation of the ability of the
Primary Obligor to make payment of the indebtedness or
obligation; or
(d) otherwise to assure the owner of the indebtedness or
obligation of the Primary Obligor against loss in respect
thereof.
For purposes of computing the amount of any Guaranty, in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
HAZARDOUS SUBSTANCES -- means any and all pollutants, contaminants,
toxic or hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, urea formaldehyde foam
insulation and polychlorinated biphenyls).
HAWK -- means the Company immediately prior to giving effect to the
transactions contemplated on the Closing Date.
▇▇▇▇▇▇ -- means ▇▇▇▇▇▇, Inc., a Delaware corporation.
▇▇▇▇▇▇ HOLDINGS -- means ▇▇▇▇▇▇ Holdings, Inc., a Delaware corporation.
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▇▇▇▇▇▇ SELLER NOTE -- means that certain Secured Promissory Note of
▇▇▇▇▇▇ in favor of Helco, Inc in the original principal amount of Five hundred
Thousand Dollars ($500,000).
▇▇▇▇▇▇ 9% SHAREHOLDER NOTES -- means the 9% Subordinated Notes, dated
July 1, 1994 issued by ▇▇▇▇▇▇ to various shareholders of ▇▇▇▇▇▇ in the aggregate
principal amount of Two Hundred Thousand Dollars ($200,000).
▇▇▇▇▇▇ SHAREHOLDER NOTE PREPAYMENTS -- means the prepayments, in full,
by the Company of the ▇▇▇▇▇▇ 9% Shareholder Notes (as in effect on the Closing
Date) provided that contemporaneously with such prepayments all such ▇▇▇▇▇▇
Shareholder Notes are cancelled and returned to the Company.
HOUSEHOLD shall mean First Source Financial LLP, a Delaware limited
partnership, successor to Household Commercial Financial Services, Inc., a
Delaware corporation.
HOUSEHOLD WARRANT REDEMPTION shall have the meaning provided in Section
3.10(c).
HOUSEHOLD WARRANT REDEMPTION AGREEMENT shall mean the Warrant
Redemption Agreement, dated as of June 30, 1995, among Household and the Company
as in effect on the Closing Date, and as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
HOUSEHOLD WARRANT REDEMPTION DOCUMENTS shall mean each of the documents
or agreements relating to the consummation of the Household Warrant Redemption,
including, without limitation, the Household Warrant Redemption Agreement.
HOUSEHOLD WARRANTS shall mean all of the warrants for the purchase of
capital stock of the Company owned by Household.
INTEREST RATE PROTECTION AGREEMENTS -- means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement, interest rate floor agreement or other similar agreement
or arrangement with respect to the payment of interest.
INSTITUTIONAL INVESTOR -- means the Purchasers, any affiliate of any of
the Purchasers, and any holder of Subordinated Notes that is an "accredited
investor" as defined in section 2(15) of the Securities Act.
INVENTORY -- means all of the inventory of the Company and the
Subsidiaries described as "Eligible Inventory" in an Acceptable Credit Facility.
INVESTMENT -- means any investment, made in cash or by delivery of
Property, by either of the Company or any Subsidiary:
(a) in any Person, whether by acquisition of stock,
indebtedness or other obligation or security, or by loan, Guaranty,
advance, capital contribution or otherwise; or
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(b) in any Property.
IPO -- means the first offer for sale of Class A Common Stock of the
Company pursuant to an effective registration statement filed by the Company
under the Securities Act.
IRC -- means the Internal Revenue Code of 1986, together with all rules
and regulations promulgated pursuant thereto, as amended from time to time.
IRR -- means, with respect to any prepayment or acceleration of all but
not less than all of the Subordinated Notes concurrent with or after a Trigger
Event, the internal rate of return on the holders' investment in the
Subordinated Notes and Warrants, before any provision for the income taxes of
such holder with respect to such investment, determined in respect of the period
ending on the date of such prepayment or acceleration and beginning on the
Closing Date, calculated in accordance with accepted financial practice and in
the making of such determination giving effect to
(a) the aggregate purchase price at the Closing of the
Subordinated Notes and Warrants was Thirty Million Dollars
($30,000,000),
(b) all payments of principal of, and interest and the
Prepayment Compensation Amount, if any, on the Subordinated Notes
actually received by the holders of the Subordinated Notes prior to the
date of such prepayment or acceleration,
(c) all other payments of cash actually received, or to be
received, by the holders of Subordinated Notes on or prior to the date
of such prepayment or acceleration, including, without limitation,
pursuant to Section 1 through Section 6, inclusive, of the
Shareholders' Agreement and any sale or other transfer of the Warrants,
Warrant Shares or any part thereof, and
(d) in the event of an IPO in which the holders of the
Subordinated Notes do not sell any or all of the Warrant Shares held by
them at such time, the holders of the Subordinated Notes shall be
deemed to have received an amount equal to the initial public offering
price of the Class A Common Stock multiplied by the number of Warrant
Shares not sold by such holders in the IPO.
IRR AMOUNT -- means, with respect to the prepayment of all but not less
than all of the Subordinated Notes concurrent with or after a Trigger Event, the
amount necessary to give the holders of Subordinated Notes an IRR with respect
to such prepayment or acceleration equal to twenty percent (20%).
IRS -- means the Internal Revenue Service and any successor agency.
ISSUABLE SHARE -- means and includes at any time,
(a) a share of issued and outstanding Common Stock, and
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(b) a Right (including, without limitation, a Warrant), and
(without duplication) all shares of Common Stock issuable upon exercise
of such Right, in each case at such time.
For purposes of this definition of "Issuable Share", a Right to acquire one
share of Common Stock shall constitute one Issuable Share, and a Person shall be
deemed to own an Issuable Share if such Person has a Right to acquire such share
whether or not such Right is exercisable at such time.
LIEN -- means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, assignment, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement under
the Uniform Commercial Code of any jurisdiction, or an agreement to give any of
the foregoing. The term "Lien" includes reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting real property and includes, with
respect to stock, stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements. For the purposes hereof, the Company
and each Subsidiary is deemed to be the owner of any Property that it shall have
acquired or holds subject to a conditional sale agreement, Capital Lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes, and such retention or
vesting is deemed a Lien. The term "Lien" does not include negative pledge
clauses in agreements relating to the borrowing of money.
MAKE-WHOLE AMOUNT -- means, with respect to any date (a "PREPAYMENT
DATE") and any principal amount ("PREPAID PRINCIPAL") of Subordinated Notes
required or permitted for any reason to be paid prior to the regularly scheduled
maturity thereof on such Prepayment Date pursuant to this Agreement, the greater
of
(a) Zero Dollars ($0), and
(b) (i) the sum of the present values of the then
remaining scheduled payments of principal and interest that
would be payable in respect of such Prepaid Principal but
for such prepayment or acceleration, minus
(ii) the sum of
(A) the amount of such Prepaid Principal, plus
(B) the amount of interest accrued on such
Prepaid Principal since the scheduled interest
payment date immediately preceding such Prepayment
Date.
In determining such present values, a discount rate equal to the Make-Whole
Discount Rate with respect to such Prepayment Date and Prepaid Principal divided
by four (4), and a discount period of three (3) months of thirty (30) days each,
shall be used.
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As used in this definition:
Make-Whole Discount Rate -- means, with respect to any
Prepayment Date and Prepaid Principal, the sum of
(a) the per annum percentage rate (rounded to the
nearest three (3) decimal places) equal to the bond equivalent
yield to maturity derived from the annual yield to maturity of
the United States Treasury obligation listed in the Applicable
H.15 as of such Prepayment Date for the then most recently
available day in such Applicable H.15 with a Treasury Constant
Maturity (as defined in such Applicable H.15) equal to the
Weighted Average Life to Maturity of such Prepaid Principal
determined as of such Prepayment Date, plus
(b) two and one-half percent (2.50%) per annum.
For purposes of clause (a) of the preceding sentence, if no United
States Treasury obligation with a Treasury Constant Maturity
corresponding exactly to the Weighted Average Life to Maturity of such
Prepaid Principal is listed, the yields for the two (2) published
United States Treasury obligations with Treasury Constant Maturities
most closely corresponding to such Weighted Average Life to Maturity
(one (1) with a longer maturity and one (1) with a shorter maturity, if
available) shall be calculated pursuant to the immediately preceding
sentence and the Make-Whole Discount Rate shall be interpolated or
extrapolated from such yields on a straight-line basis.
Applicable H.15 -- means, on any date, United States Federal
Reserve Statistical Release H.15(519) or its successor publication then
most recently published and available to the public or, if no such
successor publication is available, then any other source of current
information in respect of interest rates on securities of the United
States of America that is generally available and, in the judgment of
the Required Holders, provides information reasonably comparable to the
H.15(519) report.
Weighted Average Life to Maturity -- means, with respect to
any Prepayment Date and Prepaid Principal, the number of years obtained
by dividing the Remaining Dollar-Years of such Prepaid Principal
determined on such Prepayment Date by such Prepaid Principal.
Remaining Dollar-Years -- means, with respect to any
Prepayment Date and Prepaid Principal, the result obtained by
(a) multiplying, in the case of each required
payment of principal (including payment at maturity) that
would be payable in respect of such Prepaid Principal but for
such prepayment,
(i) an amount equal to such required payment
of principal, by
(ii) the number of years (calculated to the
nearest one-twelfth (1/12) that will elapse between
such Prepayment Date and the date such
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required principal payment would be due if such
Prepaid Principal had not been so prepaid, and
(b) calculating the sum of each of the products
obtained in the preceding subsection (a).
MANAGEMENT STOCKHOLDERS -- means the Persons listed on PART 11.1(A) OF
ANNEX 3.
MARGIN SECURITY -- means "margin stock" within the meaning of
Regulations G, T, and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II, as amended from time to time.
MATERIAL ADVERSE EFFECT -- means a material adverse effect on
(a) the business, profits, Properties or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as
a whole,
(b) the ability of the Company to perform its
obligations set forth in this Agreement, or any other Financing
Documents, or
(c) the ability of any Wholly-Owned Domestic Subsidiary
to perform its obligations set forth under the Subsidiary Subordinated
Guarantee to which it is a party, or
(d) the validity or enforceability of this Agreement,
the Subordinated Notes, the Subsidiary Subordinated Guarantees or any
other Financing Documents.
MATERIAL SUBSIDIARY -- shall mean, at any time, any Subsidiary that (a)
has assets at such time comprising ten percent (10%) or more of the aggregate
amount of the assets of the Company and the Subsidiaries at such time as would
appear on a consolidated balance sheet of such Persons prepared in accordance
with GAAP or (b) contributed, for the most recently ended fiscal year of the
Company, ten percent (10%) or more of Consolidated Net Income for such fiscal
year.
MAXIMUM REVOLVER AMOUNT -- means, at any time, the amount equal to the
sum of (a) the Eligible Accounts Receivable Amount plus (b) the Eligible
Inventory Amount, in each case determined at such time.
MERGER -- means the merger of ▇▇▇▇▇▇ with and into ▇▇▇▇▇▇ Holdings.
MERGER AGREEMENT -- means the Merger Agreement, dated June 30, 1995,
between ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Holdings.
MERGER DOCUMENTS -- Section 2.21(c).
MOODY'S -- means ▇▇▇▇▇'▇ Investor Services, Inc.
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MULTIEMPLOYER PLAN -- means any multiemployer plan (as defined in
section 3(37) of ERISA) in respect of which the Company or any ERISA Affiliate
is an "employer" (as such term is defined in section 3 of ERISA).
MULTIPLE EMPLOYER PENSION PLAN -- means any employee benefit plan
within the meaning of section 3(3) of ERISA (other than a Multiemployer Plan),
subject to Title IV of ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in section 3 of ERISA) other than the Company
or an ERISA Affiliate contribute.
NET INCOME AVAILABLE FOR FIXED CHARGES -- means, with respect to any
To-Be-Acquired Business for any period, the sum of the net income before taxes
of such Person for such period determined in accordance with GAAP plus (to the
extent, and only to the extent, that such amounts were deducted in the
computation of the net income of such Person) the aggregate amount of interest
expense, rental expense and amortization, in each case as may be agreed upon by
the Company and the Required Holders with respect to such period.
NET PROCEEDS -- means, with respect to any Transfer of Property, the
cash proceeds of such transfer net of any reasonable and ordinary transaction
costs and expenses incurred in connection with such Transfer.
NOTE PURCHASE AGREEMENTS -- Section 1.3.
OPERATING LEASE -- means, with respect to any Person, any lease under
which such Person is, or has the obligations of, the lessee, other than a
Capital Lease.
OPERATING RENTALS -- means, with respect to any Person, all fixed
payments that such Person is required to make as lessee under, or by the terms
of, any Operating Lease, including, without limitation, additional rentals (in
excess of fixed minimums) based upon a percentage of gross receipts.
OTHER HEDGING AGREEMENTS shall mean any foreign exchange contracts,
currency swap agreements or other similar agreements or arrangements designed to
protect against fluctuations of currency values or any commodity forward, future
or similar agreements or arrangements designed to protect against fluctuations
of the prices of commodities used by the Company or any of its Subsidiaries in
the ordinary course of business.
OTHER PURCHASER -- Section 1.3.
PBGC -- means the Pension Benefit Guaranty Corporation and any
successor corporation or governmental agency.
PENSION PLAN -- means, at any time, any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) maintained at such time by the
Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan.
PERMITTED AFFILIATE TRANSACTIONS -- means
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(a) the loans by the Company to certain shareholders of
the Company evidenced by the Shareholder Notes (as in effect on the
Closing Date),
(b) the ▇▇▇▇▇▇ Shareholder Note Prepayments,
(c) the execution, delivery and performance by the Company
of the Employment Agreements (as in effect on the Closing Date),
(d) the execution, delivery and performance by the Company
of the Wage Continuation Agreements (as in effect on the Closing Date),
(e) payments by the Company to reimburse ▇▇▇▇▇▇▇▇ Capital
Corporation for amounts paid by ▇▇▇▇▇▇▇▇ Capital Corporation to
unaffiliated third parties on behalf of the Company with respect to
rent, overhead and administrative expenses for the executive offices of
the Company and reimbursement of travel expenses for officers of the
Company in connection with their duties as officers of the Company, in
all such cases, to the extent such reimbursement is for payments
actually made by ▇▇▇▇▇▇▇▇ Capital Corporation to unaffiliated third
parties,
(f) payment by the Company of principal and interest on
the ▇▇▇▇▇▇ Seller Note (as in effect on the Closing Date),
(g) payment by the Company on the Closing Date of accrued
but unpaid management fees earned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ as of July 1, 1995 in connection with the management of ▇▇▇▇▇▇
in an aggregate amount not to exceed Fifty Thousand Dollars ($50,000),
(h) the consummation on the Closing Date of the Household
Warrant Redemption,
(i) payment by the Company of cash dividends in respect of
the Existing Preferred Stock in accordance with Section 7.8,
(j) payment by the Company of the Put Option Purchase
Price to the holders of the Warrants in accordance with Section 7.8,
and
(k) payment of customary fees to members of the Board of
Directors who are not also officers, employees or Affiliates (except if
such persons are Affiliates of the Company solely by virtue of their
position as directors of the Company or are representatives of Clanco
Partners I and III, each an Ohio partnership) in an aggregate amount
for each such member not to exceed Twelve Thousand Dollars ($12,000)
per year.
PERSON -- means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
PLACEMENT MEMORANDUM -- Section 2.1.
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PREPAYMENT COMPENSATION AMOUNT -- means, at such time, with respect to
a prepayment of the Subordinated Notes pursuant to Section 5.2 or upon the
acceleration the Subordinated Notes pursuant to Section 9.2:
(a) the Make-Whole Amount with respect to the principal
amount of such Subordinated Notes so prepaid or accelerated on the
date on which such action occurs, or
(b) in the event such prepayment is a prepayment of all but
not less than all of the Subordinated Notes and such prepayment is
concurrent with or after the occurrence of a Trigger Event, the lesser
of:
(i) the Make-Whole Amount with respect to the
principal amount of such Subordinated Notes so prepaid or
accelerated on the date on which such action occurs, and
(ii) the IRR Amount with respect to such prepayment
or acceleration.
PRO FORMA CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES -- means
at any time Consolidated Net Income Available for Fixed Charges for the period
of twelve (12) calendar months then most recently ended assuming for such
calculation that
(a) each To-Be-Acquired Business proposed to be acquired at
such time was acquired on the first day of such period and each former
To-Be-Acquired Business actually acquired by the Company or a
Subsidiary since the beginning of such period was acquired on the first
day of such period,
(b) for all or any portion of such period prior to the
acquisition thereof by the Company or any Subsidiary, such Consolidated
Net Income Available for Fixed Charges shall include Net Income
Available for Fixed Charges for each such To-Be-Acquired Business for
all or such portion of such period prior to such acquisition, and
(c) each Disposed of Business at such time which shall have
been sold or disposed of after the beginning of such period was sold or
disposed of on the first day of such period.
PRO FORMA FIXED CHARGES -- means at any time the maximum amount payable
in any period of twelve (12) calendar months ended after such time in respect of
Consolidated Fixed Charges determined after giving effect to the acquisition by
the Company or any Subsidiary of any To-Be Acquired Business proposed to be
acquired at such time and the incurrence at such time by the Company and the
Subsidiaries of any additional Consolidated Debt and the retirement at such time
of any other Consolidated Debt with the proceeds thereof and based upon the
following assumptions (without duplication):
(a) no Consolidated Debt will be prepaid prior to the
regularly scheduled payment dates therefor and any such Consolidated
Debt which does not bear interest at a fixed rate will accrue interest
for the duration of such period at the rate of interest in effect at
such time,
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(b) all amounts which are owing with respect to Guaranties
issued by the Company or any Subsidiary (i) are direct obligations of
the Person which issued such Guaranty, (ii) are outstanding at such
date and (iii) are of the nature and type of, and bear interest at the
rate provided for in, the underlying obligation being so guarantied,
(c) with respect to any letters of credit or surety bonds
for which the Company or Subsidiary has a reimbursement obligation, the
full amount thereof shall have been drawn upon at such date and shall
not be reimbursed for the duration of such period and shall, subject to
the assumptions of clause (a) above, bear interest as provided for by
the terms of such letter of credit or surety bond, and
(d) with respect to any Operating Lease of the Company or
Subsidiary, no such Operating Lease will be terminated prior to its
regularly scheduled expiration date, any portion of future Consolidated
Operating Rental Expense which is determined on a basis other than
fixed rentals will in all future yearly periods be the same amount as
was payable in the fiscal year of the Company then most recently ended
.
PROJECTIONS -- Section 2.4(d).
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
PURCHASE MONEY LIEN -- means
(a) a Lien held by any Person (whether or not the seller of
such assets) on Acceptable Property (or a group of related items of
Acceptable Property), which Lien secures all or a portion of the
related purchase price or construction costs of such Acceptable
Property, provided that such Lien
(i) encumbers only Acceptable Property acquired or
constructed with the proceeds of the Debt secured thereby, and
(ii) such Lien is not thereafter extended to any other
Property.
PURCHASERS -- means the Persons listed as purchasers of Subordinated
Notes on Annex 1.
PUT OPTION PURCHASE PRICE -- shall have the meaning ascribed to such
term in the Warrant Agreement.
REPORTABLE EVENT -- shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .13 through subsection .16, inclusive,
or subsection .18 through subsection .20, inclusive of PBGC Regulation Section
2615.
REPURCHASE PRICE -- shall have the meaning ascribed to such term in the
Warrant Agreement.
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REQUIRED HOLDERS -- means, at any time, the holders of greater than
fifty-one percent (51%) in principal amount of the Subordinated Notes at the
time outstanding (exclusive of Subordinated Notes then owned by any one or more
of the Company, any Subsidiary, any Affiliate and any officer or director of any
thereof).
RESTRICTED INVESTMENT -- means, at any time, all Investments except the
following:
(a) Investments in Subsidiaries or any corporation that
concurrently with such Investment becomes a Subsidiary;
(b) Investments in Property used or useful in the ordinary
course of business of the Company and the Subsidiaries;
(c) Investments in accounts receivable arising from the
sale of goods and services in the ordinary course of business of the
Company and the Subsidiaries;
(d) Investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one (1) year from the date of acquisition thereof;
(e) Investments in time deposits or certificates of deposit
maturing within one (1) year from the date of acquisition issued by a
bank or trust company organized under the laws of the United States of
America or any state thereof having capital, surplus and undivided
profits aggregating at least One Hundred Million Dollars
($100,000,000), and the deposits of which are rated in one of the three
(3) highest rating categories by a credit rating agency of recognized
national standing;
(f) Investments in commercial paper rated "A-1" (or higher)
by Standard & Poor's or "P-1" (or higher) by Moody's (or any future
comparable ratings issued by Standard & Poor's or Moody's), provided
that such obligations mature within one (1) year from the date of
creation thereof;
(g) Investments in any money market fund which has all or
substantially all of its investments in Securities of the type
described in clause (d), clause (e) or clause (f) above or clause (k)
below;
(h) Investments in joint ventures not to exceed One Million
Dollars ($1,000,000) in the aggregate for all such Investments in
joint ventures;
(i) Investments of the type described in clause (d), clause
(e), clause (f) and clause ((k) without regard to maturity thereof,
provided that the aggregate amount of all such Investments outstanding
at any time shall not exceed Two Million Dollars ($2,000,000); and
(j) Investments in the Shareholder Notes;
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(k) Investments in repurchase obligations with a term of not
more than seven (7) days for underlying securities of the types
described in clause (d) above entered into with any bank meeting the
qualifications specified in clause (e) above;
(l) Investments represented by loans and advances in the
ordinary course of business and consistent with past practices to
employees of the Company and the Subsidiaries for moving, travel and
emergency expenses and other similar expenses, so long as the aggregate
principal amount thereof at any time outstanding (determined without
regard to any write-downs or write-offs of such loans and advances)
shall not exceed Two Hundred Thousand Dollars ($200,000);
(m) Investments represented by non-cash loans to employees
of the Company or the Subsidiaries in connection with such employee's
purchase of the capital stock of the Company pursuant to employee stock
option plans approved by the Board of Directors, and
(n) Investments represented by Swaps entered into in
accordance with Section 7.4(g) or Section 7.4(h).
RESTRICTED PAYMENT -- means:
(a) any dividend or other distribution (whether in the form
of cash or any other Property), direct or indirect, on account of any
shares of capital stock of the Company or any Subsidiary (other than
capital stock owned legally and beneficially by the Company or any of
the Wholly-Owned Subsidiaries), now or hereafter outstanding, except a
dividend payable solely in shares of common stock of the Company or
such Subsidiary, as the case may be, or
(b) any optional or mandatory redemption, retirement,
purchase or other acquisition, direct or indirect, of any shares of
capital stock of the Company or any Subsidiary (other than capital
stock owned legally and beneficially by the Company or any of the
Wholly-Owned Subsidiaries), now or hereafter outstanding, or of any
warrants, rights, or options to acquire any shares of such capital
stock.
RIGHT -- means and includes any warrant (including, without limitation,
any Warrant), option or other right, to acquire Common Stock and including,
without limitation, any right pursuant to the provisions of any Security
convertible or exchangeable into Common Stock.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- means "security" as defined in Section 2(1) of the
Securities Act.
SENIOR DEBT -- means and includes all obligations, liabilities and
indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, premium, interest (including, without
limitation, interest accruing after the filing of a petition initiating any
proceeding referred to in clause (h), clause (i) or clause (j) of Section 9.1 at
the rate specified in the instrument governing the relevant Debt whether or not
such interest is an allowable claim in such proceeding) fees, expenses,
indemnification, reimbursement obligations or otherwise, under
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(a) Acceptable Credit Facilities, and
(b) any agreement creating Debt described in Section 7.4(f),
Section 7.4(g), Section 7.4(h) or Section 7.4(j) so long as by its
terms such Debt is senior to the Subordinated Debt and only to the
extent the principal amount thereof shall have been permitted to be
incurred under such Sections;
so long as, in the case of clause (b) above, such obligation, liability and
indebtedness is not "unsecured indebtedness" or a "claim of a trade creditor"
within the meaning of Section 279 of the IRC.
SENIOR DEBT COVENANT DEFAULT -- means an event or condition, other than
an event or condition specified in Section 10.2(a), which gives the holders of
Senior Debt under any Acceptable Credit Facility the right to accelerate the
maturity of such Senior Debt as a direct result of a failure by the Company to
perform its obligations as set forth in any Acceptable Credit Facility.
SENIOR FINANCIAL OFFICER -- means any of the treasurer, controller or
any other senior financial officer of the Company.
SENIOR OFFICER -- means any of the president, any vice president, the
treasurer or any other senior executive or financial officer of the Company.
SHAREHOLDERS' AGREEMENT -- Section 3.8.
SHAREHOLDER NOTES -- means each of the following:
(a) the Promissory Note of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated June 30,
1995, in favor of the Company in the original principal amount of Sixty
Thousand Seven Hundred Thirty-Six and 50/100 Dollars ($60,736.50);
(b) the Promissory Note of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated June 30,
1995, in favor of the Company in the original principal amount of Ten
Thousand Dollars ($10,000);
(c) the Promissory Note of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, dated June 30,
1995, in favor of the Company in the original principal amount of Eight
Hundred Two Thousand One Hundred Thirty-one and 75/100 Dollars
($802,131.75);
(d) the Promissory Note of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated June 30,
1995, in favor of the Company in the original principal amount of Eight
Hundred Two Thousand One Hundred Thirty-one and 75/100 Dollars
($802,131.75);
(e) the Promissory Note of Clanco Partners I, dated June 30,
1995, in favor of the Company in the original principal amount of One
Hundred Sixty-Two Thousand Five Hundred Dollars ($162,500.00); and
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(f) the Promissory Note of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, dated June 30,
1995, in favor of the Company in the original principal amount of One
Hundred Sixty-Two Thousand Five Hundred Dollars ($162,500.00).
STANDARD & POOR'S -- means the Standard & Poor's Ratings Group, a
division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
SUBORDINATED DEBT -- means and includes all obligations, liabilities
and indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, Prepayment Compensation Amount,
pre-petition interest, fees, expenses, indemnification or otherwise, under the
Note Purchase Agreements or the Subordinated Notes, together with any
post-petition interest on the foregoing indebtedness which has been allowed by
the applicable bankruptcy court having jurisdiction over a bankruptcy or similar
proceeding involving the Company.
SUBORDINATED NOTES -- Section 1.1.
SUBSIDIARY -- means, at any time, a corporation of which the Company
owns, directly or indirectly, more than fifty percent (50%) (by number of votes)
of each class of the Voting Stock of such corporation at such time.
SUBSIDIARY RESTRUCTURING -- means the restructuring of the Subsidiaries
in the manner described in PART 11.1 OF ANNEX 3 with such changes thereto which
shall be approved by the Required Holders.
SUBSIDIARY STOCK -- Section 7.7(b).
SUBSIDIARY SUBORDINATED GUARANTEES -- Section 3.6.
SUCCESSOR CORPORATION -- Section 7.6.
SWAPS -- means, with respect to any Person, Interest Rate Protection
Agreements and Other Hedging Agreements and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. For the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof as of the end
of the then most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal quarter, and
in making such determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
TO-BE-ACQUIRED BUSINESS -- means at any time any business (which may be
a corporation or a division thereof, a partnership, sole proprietorship, limited
liability company or other entity) which the Company or any Subsidiary has
agreed at such time (pursuant to a written agreement):
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(a) to acquire by purchase one hundred percent (100%) of
the equity Securities thereof; or
(b) to merge therewith or acquire all or substantially all
of the assets thereof.
TRANSFER -- Section 7.7(a).
TRIGGER EVENT -- means the occurrence of any one or more of the
following events:
(a) the holders of the Warrant Shares shall have exercised
their right, pursuant to the terms of the Section 1 of the
Shareholders' Agreement, to require the Company to purchase all of the
Warrant Shares and the Company shall have paid the Put Option Purchase
Price in connection therewith;
(b) the Company shall have exercised its right, pursuant to
the terms of the Section 2 of the Shareholders' Agreement, to require
the holders of the Warrant Shares to sell all of the Warrant Shares and
the Company shall have paid the Repurchase Price in connection
therewith;
(c) the holders of the Subordinated Notes sell or otherwise
transfer all of the Warrant Shares; or
(d) an IPO.
VOTING STOCK -- means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect corporate directors (or Persons performing
similar functions) (irrespective of whether or not at any time of determination,
stock of any class or classes shall have or might have special voting power or
rights by reason of the happening of any contingency).
WAGE CONTINUATION AGREEMENTS -- means those certain separate Wage
Continuation Agreements between the Company and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in each case dated June 30, 1995.
WARRANT AGREEMENT -- Section 3.7.
WARRANT CERTIFICATE -- Section 3.7.
WARRANTS -- Section 3.7.
WARRANT SHARES -- shall have the meaning ascribed to such term in the
Shareholders' Agreement.
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▇▇▇▇▇▇▇ -- means ▇.▇. ▇▇▇▇▇▇▇ Limited, Inc., a Michigan corporation.
▇▇▇▇▇▇▇ ACQUISITION AGREEMENT shall mean the Agreement for Purchase and
Sale of the Capital Stock of ▇.▇. ▇▇▇▇▇▇▇ Limited, Inc., dated as of April 10,
1995 among Hawk Corporation, The Hawk Group of Companies, Inc, an Ohio
corporation (the predecessor to the Company) and MLX Corp., a Georgia
corporation, as in effect on the Closing Date.
WHOLLY-OWNED DOMESTIC SUBSIDIARY -- means, each Wholly-Owned Subsidiary
which is organized under the laws of the United States or any jurisdiction
thereof.
WHOLLY-OWNED SUBSIDIARY -- means, each Subsidiary one hundred percent
(100%) of all of the equity Securities (except directors' qualifying shares) and
voting Securities of which are owned by any one or more of the Company and the
Company's other Wholly-Owned Subsidiaries.
11.2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
Where the character or amount of any asset or liability or item of
income or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in accordance
with GAAP as in effect on the Closing Date, provided, that if any term defined
herein includes or excludes amounts, items or concepts that would not be
included in or excluded from such term if such term was defined with reference
solely to GAAP as in effect on the Closing Date, such term will be deemed to
include or exclude such amounts, items or concepts as set forth herein.
11.3 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
11.4 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC.. The titles
of the Sections and the Table of Contents appear as a matter of
convenience only, do not constitute a part hereof and shall not affect
the construction hereof. The words "herein," "hereof," "hereunder" and
"hereto" refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless otherwise specified, references to
Sections are to Sections of this Agreement and references to an "Annex"
or an "Exhibit" are to an Annex or an Exhibit attached to this
Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
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11.5 GOVERNING LAW; JURISDICTION.
(a) GOVERNING LAW. THIS AGREEMENT AND THE SUBORDINATED NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL
CONNECTICUT LAW.
(b) JURISDICTION; JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
CONNECTICUT COURT IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. NONE
OF THE PARTIES HERETO SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF OR
OTHERWISE RELATED TO THIS AGREEMENT OR ANY OF THE SUBORDINATED NOTES AND EACH OF
THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
AND ALL RIGHT TO ANY SUCH JURY TRIAL AND ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY SUCH
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11.5.
12. MISCELLANEOUS
12.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or under
the Subordinated Notes shall be in writing, shall be hand delivered,
deposited into the United States mail (registered or certified mail),
postage prepaid, or sent by overnight courier, and shall be addressed,
(i) if to the Company,
The Hawk Group of Companies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
TEL: (▇▇▇) ▇▇▇-▇▇▇▇
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FAX: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Company shall have furnished in writing
to all holders of the Subordinated Notes at the time outstanding, and
(ii) if to any of the holders of the Subordinated
Notes,
(A) if such holders are the Purchasers, at
their respective addresses set forth on Annex 1, and
further including any parties referred to on such
Annex 1 that are required to receive notices in
addition to such holders of the Subordinated Notes,
and
(B) if such holders are not the Purchasers,
at their respective addresses set forth in the
register for the registration and transfer of
Subordinated Notes maintained pursuant to Section
7.3,
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 12.1 to the
Company (which other address shall be entered in such register).
(b) WHEN GIVEN. Any communication so addressed and deposited
in the United States mail, postage prepaid, by registered or certified
mail (in each case, with return receipt requested) shall be deemed to
be received on the third (3rd) succeeding Business Day after the day of
such deposit (not including the date of such deposit). Any notice so
addressed and otherwise delivered shall be deemed to be received when
actually received at the address of the addressee.
12.2 INDEMNIFICATION OF EACH HOLDER.
From and at all times after the date of this Agreement, and in addition
to all of the holders' of Subordinated Notes other rights and remedies against
the Company, the Company agrees to indemnify and hold harmless each holder of
the Subordinated Notes and each director, officer, employee, agent and affiliate
of each such holder against any and all claims (whether valid or not), losses,
damages, liabilities, costs and expenses of any kind or nature whatsoever
(including, without limitation, reasonable attorneys' fees, costs and expenses),
including without limitation claims arising under Environmental Protection Laws
or out of matters relating to Hazardous Substances, incurred by or asserted
against such holder or any such director, officer, employee, agent or affiliate,
from and after the date hereof, whether direct or indirect, as a result of or
arising from or in any way relating to any suit, action or proceeding (including
any inquiry or investigation) by any Person, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any Person under any
statute or regulation, including, but not limited to, any federal or state
securities laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation, execution,
performance or enforcement of this Agreement or the other Financing Documents or
any transactions contemplated herein or therein, or any of the transactions
contemplated hereunder, whether or not such holder or any such director,
officer, employee, agent or affiliate is a party to any such action, proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no indemnified party shall have
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the right to be indemnified hereunder for any liability resulting from the
willful misconduct or gross negligence of such indemnified party. All of the
foregoing losses, damages, costs and expenses of any holder of Subordinated
Notes shall be payable as and when incurred upon demand by such holder and shall
be additional obligations hereunder. The obligations of the Company and the
rights of the holder of Subordinated Notes under this Section 12.2 shall survive
payment of the Subordinated Notes and the termination hereof.
12.3 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation,
(a) consents, waivers and modifications that may hereafter be
executed,
(b) documents received by you at the closing of your purchase
of the Subordinated Notes (except the Subordinated Notes themselves),
and
(c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of
Subordinated Notes,
may be reproduced by any holder of Subordinated Notes by any photographic,
photostatic, microfilm, micro-card, miniature photographic, digital or other
similar process and each holder of Subordinated Notes may destroy any original
document so reproduced. The Company agrees and stipulates that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such holder of
Subordinated Notes in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. Nothing in this Section 12.3 shall prohibit the Company
or any holder of Subordinated Notes from contesting the accuracy of any such
reproduction.
12.4 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company herein or in any certificate or other instrument delivered by it or
on its behalf hereunder shall be considered to have been relied upon by you and
shall survive the delivery to you of the Subordinated Notes regardless of any
investigation made by you or on your behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company hereunder.
12.5 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of
Subordinated Notes, and shall be enforceable by any such holder, whether or not
an express assignment to such holder of rights hereunder shall have been made by
you or your successor or assign.
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12.6 AMENDMENT AND WAIVER.
(a) REQUIREMENTS. This Agreement may be amended, and the
observance of any term hereof may be waived, with (and only with) the
written consent of the Company and the Required Holders; provided that
no such amendment or waiver of any of the provisions of Section 1,
Section 3 and Section 4 or any defined term used therein (provided that
the Required Holders can amend a defined term used in such Section for
purposes of other Sections), shall be effective as to any holder of
Subordinated Notes unless consented to by such holder in writing; and
provided further that no such amendment or waiver shall, without the
written consent of the holders of all Subordinated Notes (exclusive of
Subordinated Notes held by the Company, any Subsidiary or any
Affiliate) at the time outstanding,
(i) subject to Section 9.3, change the amount or time
of any prepayment or payment of principal or the Prepayment
Compensation Amount or the rate or time of payment of
interest,
(ii) amend Section 9,
(iii) amend the definition of Required Holders, or
(iv) amend this Section 12.6.
The holder of any Subordinated Note may specify that any such written
consent executed by it shall be effective only with respect to a
portion of the Subordinated Notes held by it (in which case it shall
specify, by dollar amount, the aggregate principal amount of
Subordinated Notes with respect to which such consent shall be
effective) and in the event of any such specification such holder shall
be deemed to have executed such written consent only with respect to
the portion of the Subordinated Notes so specified. Notwithstanding the
foregoing, no amendment or waiver of any of the provisions of Section
10, or any of the defined terms related thereto, shall be effective
without the written consent of the holders of all Senior Debt and all
Subordinated Notes (exclusive of Senior Debt and Subordinated Notes
held by the Company, any Subsidiary or any Affiliate) at the time
outstanding.
(b) SOLICITATION OF SUBORDINATED NOTEHOLDERS.
(i) SOLICITATION. The Company shall not solicit,
request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions hereof or the
Subordinated Notes unless each holder of the Subordinated
Notes (irrespective of the amount of Subordinated Notes then
owned by it) shall be informed thereof by the Company with
sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct
copies of any waiver or consent effected pursuant to the
provisions of this Section 12.6 shall be delivered by the
Company to each holder of outstanding Subordinated Notes
forthwith following the date on which the same shall have been
executed and
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delivered by all holders of outstanding Subordinated Notes
required to consent or agree to such waiver or consent.
(ii) PAYMENT. The Company, neither directly or
indirectly, shall pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of
Subordinated Notes as consideration for or as an inducement to
the entering into by any holder of Subordinated Notes of any
waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to the
holders of all Subordinated Notes then outstanding.
(iii) SCOPE OF CONSENT. Any consent made pursuant to
this Section 12.6 by a holder of Subordinated Notes that has
transferred or has agreed to transfer its Subordinated Notes
to the Company, any Subsidiary or any Affiliate and has
provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force and
effect except solely as to such holder, and any amendments
effected or waivers granted or to be effected or granted that
would not have been or would not be so effected or granted but
for such consent (and the consents of all other holders of
Subordinated Notes that were acquired under the same or
similar conditions) shall be void and of no force and effect,
retroactive to the date such amendment or waiver initially
took or takes effect, except solely as to such holder.
(c) BINDING EFFECT. Except as provided in Section 12.6(b),
any amendment or waiver consented to as provided in this Section 12.6
shall apply equally to all holders of Subordinated Notes and shall be
binding upon them and upon each future holder of any Subordinated Note
and upon the Company whether or not such Subordinated Note shall have
been marked to indicate such amendment or waiver. No such amendment or
waiver shall extend to or affect any obligation, covenant, agreement,
Default or Event of Default not expressly amended or waived or impair
any right consequent thereon.
12.7 PAYMENTS, WHEN RECEIVED.
(a) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with
respect to, any Subordinated Note shall fall due on a day other than a
Business Day, then such payment shall be made on the first Business Day
following the day on which such payment shall have so fallen due;
provided that if all or any portion of such payment shall consist of a
payment of interest, for purposes of calculating such interest, such
payment shall be deemed to have been originally due on such first
following Business Day, such interest shall accrue and be payable to
(but not including) the actual date of payment, and the amount of the
next succeeding interest payment shall be adjusted accordingly.
(b) PAYMENTS, WHEN RECEIVED. Any payment to be made to the
holders of Subordinated Notes hereunder or under the Subordinated Notes
shall be deemed to have been made on the Business Day such payment
actually becomes available to such holder at such holder's bank prior
to 11:00 a.m. (local time of such bank).
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12.8 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one duplicate
original.
[Remainder of Page Intentionally Blank. Next page is signature page.]
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If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart hereof and returning such
counterpart to the Company, whereupon this Agreement shall become binding among
us in accordance with its terms.
Very truly yours,
THE HAWK GROUP OF COMPANIES, INC.
By_____________________________
Name:
Title:
ACCEPTED:
[NAME OF PURCHASER]
By__________________________
Name:
Title:
92
[SENIOR SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
of THE HAWK GROUP OF COMPANIES, INC.]
ANNEX 1
INFORMATION AS TO PURCHASERS
PURCHASER NAME CONNECTICUT GENERAL LIFE INSURANCE COMPANY
-------------- ---------------------------------------------------
Name in Which CIG & CO.
Subordinated Note is
Registered
Name in Which Warrants
are registered
----------------------------------------------------------------------------------
Subordinated Note R-1 $3,327,000
Registration Number, R-2 $3,327,000
Principal Amount of Note R-3 $3,327,000
Warrant Certificate WR-1; 35,151.973 Warrants
Registration Number; WR-2; 35,151.973 Warrants
Number of Warrants WR-3; 35,151.973 Warrants
----------------------------------------------------------------------------------
Payment on Account of
Subordinated Note
Method Federal Funds Wire Transfer
Account Information Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# ▇▇▇▇▇▇▇▇▇
OBI = [Issue Name, Private Placement
Number, Description of Security with
Rate and Maturity, Amount of Interest
and/or Principal, the Amount of any
Prepayment, the Payable Date, the
Originators Contact Name and Telephone
Number]
-----------------------------------------------------------------------------------
Accompanying Information Name of Company: The Hawk Group of Companies, Inc.
Description of
Security: 12% Senior Subordinated Notes due
June 30, 2005
Security Number: 42009# AA 7
Due Date and Application (as among principal,
premium and interest) of the payment being made:
Contact Name and Phone:
------------------------------------------------------------------------------------
Annex 1-1
93
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
================================================================================
PURCHASER NAME CONNECTICUT GENERAL LIFE INSURANCE COMPANY
Address for Notices Related CIG & Co.
to Payments c/o CIGNA Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Securities Accounting S-206
with a copy to
Chase Manhattan Bank, N.A.
Private Placement Servicing
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CIGNA Private Placements
Fax: (▇▇▇) ▇▇▇-▇▇▇▇/1005
--------------------------------------------------------------------------------
Address for All other Notices CIG & Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Private Securities Division (S-307)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
Signature Page Format CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By___________________________
--------------------------------------------------------------------------------
Tax Identification Number ▇▇-▇▇▇▇▇▇▇
================================================================================
Annex 1-2
94
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
============================================================================================
PURCHASER NAME CIGNA MEZZANINE PARTNERS III, L.P.
--------------------------------------------------------------------------------------------
Name in Which CIG & CO.
Subordinated Note is
Registered
Name in Which Warrants
are registered
--------------------------------------------------------------------------------------------
Note Registration Number, R-4 $20,019,000
Principal Amount of
Subordinated Note WR-4; 211,514.081 Warrants
Warrant Certificate
Registration Number;
Number of Warrants
----------------------------------------------------------------------------------------------
Payment on Account of
Subordinated Note
Method Federal Funds Wire Transfer
Account Information Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA# ▇▇▇▇▇▇▇▇▇
OBI = [Issue Name, Private Placement
Number, Description of Security with
Rate and Maturity, Amount of Interest
and/or Principal, the Amount of any
Prepayment, the Payable Date, the
Originators Contact Name and Telephone
Number]
--------------------------------------------------------------------------------------------
Accompanying Information Name of Company: The Hawk Group of Companies, Inc.
Description of
Security: 12% Senior Subordinated Notes due
June 30, 2005
Security Number: 42009# AA 7
Due Date and Application (as among principal, premium and
interest) of the payment being made:
Contact Name and Phone:
--------------------------------------------------------------------------------------------
Annex 1-3
95
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
================================================================================
PURCHASER NAME CIGNA MEZZANINE PARTNERS III, L.P.
-------------------------------------------------------------------------------
Address for Notices Related CIG & Co.
to Payments c/o CIGNA Investments, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Securities Accounting S-206
with a copy to
Chase Manhattan Bank, N.A.
Private Placement Servicing
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: CIGNA Private Placements
Fax: (▇▇▇) ▇▇▇-▇▇▇▇/1005
-------------------------------------------------------------------------------
Address for All other Notices CIG & Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Private Securities Division (S-307)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-------------------------------------------------------------------------------
Signature Page Format CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By_______________________________
--------------------------------------------------------------------------------
Tax Identification Number ▇▇-▇▇▇▇▇▇▇
================================================================================
Annex 1-4
96
ANNEX 2
PAYMENT INSTRUCTIONS
In accordance with Section 1.3(b) of this Agreement, the Company
authorizes and directs you to make payment for the Subordinated
Note or Subordinated Notes being purchased by you by payment of the
purchase price therefor by federal funds wire transfer in
immediately available
funds to:
Bank:Bankers Trust Company, New York, New York
ABA No.:▇▇▇-▇▇▇-▇▇▇
Account Name:The Hawk Group of Companies, Inc.
Account No.▇▇-▇▇▇-▇▇▇
Annex 2-1